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Industry NewsEmpire Q4 profit down, pauses e-comm expansion to improve profitability, raises quarterly...

Empire Q4 profit down, pauses e-comm expansion to improve profitability, raises quarterly dividend

Empire Company Limited (CNW Group/Empire Company Limited)

Empire Company reported a decline in net earnings in its fourth quarter and said it is pausing expansion plans on its Voilà business to focus more on profitability. It also said it planned to raise its quarterly dividend to 20 cents per share, up from 18.25 cents per share.

Net earnings dropped to $148.9 million in the fourth quarter compared to $182.9 million last year while adjusted net earnings were $154.0 million compared to $184.9 million last year.

Sales for the quarter totalled $7.4 billion, about the same as a year ago.

Same-store sales fell 0.3 per cent compared with the same quarter last year, while same-store sales, excluding fuel sales, rose 0.2 per cent.

In regards to its e-commerce business Voilà, Empire president and CEO Michael Medline says the company remains “very optimistic” and says Empire continues “to look at every opportunity to improve our overall profitability and each Voilà CFC takes time to become profitable; as a result, we will pause the opening of our fourth customer fulfillment centre in Vancouver, allowing us to focus on driving performance and volume in our three active CFCs. We are also working with our partner, Ocado, to decrease costs and provide increased flexibility to serve our customers more broadly, which includes ending our mutual exclusivity agreement.”

Despite the pause on Voilà expansion plans, which includes pausing the opening of its fourth CFC in Vancouver, B.C., Medline says results “are the best we’ve had since our launch,” and the company says it will to focus on “digital and data” with continued e-commerce growth via Voilà, personalization, loyalty, and through Scene+ as well as “improved space productivity and the continued improvement of promotional optimization.”

In the quarter ended May 4, 2024, Voilà experienced a sales increase of 23.5 per cent compared to the same quarter in the prior year and same-store sales growth of 17.3 per cent. Empire states that according to third-party market data, Voilà’s national market share within the e-commerce channel continues to be higher versus the same quarter in the prior year.

It also plans to continue the investment in its store network and is on trck to renovate about 20 to 25 per cent of its store network between fiscal 2024 and fiscal 2025.

Medline says fourth quarter results “clearly demonstrate that we have become a disciplined, efficient grocer with strong gross margin control as well as capital and SG&A discipline, propelled by our productivity initiatives and restructuring. When you remove our real estate related income, quarterly results were consistent with the prior year. We are committed to driving profits, including taking proactive steps to improve the bottom-line results of Voilà. At the same time, we remain committed to returning capital to our investors.”

Outlook

Empire expects capital spend to be about $700 million for fiscal 2025 with about half of this investment directed at store renovations and new store expansion.

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