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Industry NewsEmpire Company Q3 net earnings up 8.5% from year ago to $134.2M,...

Empire Company Q3 net earnings up 8.5% from year ago to $134.2M, same store sales up 1.9%

Empire Company Limited reported net earnings in its third quarter of $134.2 million compared to $125.7 million last year. Same store sales excluding fuel increased 1.9 per cent.

Adjusted net earnings for the period were $153.1 million compared to $164.8 million the year before.

“Our team delivered solid results, in line with our expectations, given a cautious consumer navigating the impacts of higher interest rates,” said Michael Medline, president & CEO, Empire. “We are a different Empire Company now, with the capabilities, processes, and disciplines in place to stay strong through tougher times as shown in our quarterly results. More than ever, we are focused on identifying novel ways to provide ongoing value to our customers, including through the recent launch of a new 11-week program that lowered or locked prices on approximately 1,000 items across many of our banners.”

Sales were $7.49 billion compared with roughly $7.48 billion a year ago.

Empire reports that sales were driven by growth in discount and full service businesses but was offset by lower fuel sales due primarily to the sale of its retail fuel sites in Western Canada in the first quarter of the company’s fiscal 2024.

RBC Dominion Securities Inc. analyst Irene Nattel noted that the grocer’s results were somewhat softer than expected. She attributed this to consumer value-seeking behaviour impacting its largely full-service network, a statement reads.

Furthermore, Empire continues strategizing to maximize revenues in its full-service stores while expanding its discount presence. There are 47 FreshCo stores in Western Canada, a part of the ongoing effort since fiscal 2018 to convert up to a quarter of Safeway and Sobeys stores in Western Canada to discount banners.

In response to government pressure to stabilize food prices, Empire affirmed its commitment to identify ways to help further stabilize prices for consumers. Negotiations with suppliers for competitive pricing and an 11-week program lowering prices on around 1,000 items across its banners reflect the company’s efforts.

With the successful completion of its transformation strategies, Project Sunrise and Project Horizon, Empire aims to grow its earnings over the long term through net earnings growth and share repurchases. Over the next three years, investments in store network renovation, including sustainability upgrades, are planned for 20 per cent to 25 per cent of its stores.

Moreover, the company is focused on digital and data initiatives, including expanding e-commerce, enhancing its loyalty program, and optimizing promotions for personalized customer experiences. Labour expenses, driven by wage rate increases, rose in the third quarter. Still, the company aims to better manage these costs through voluntary buyouts offered to senior employees at B.C. Safeway locations after ratifying new agreements with the United Food and Commercial Workers.

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