Empire Company Ltd. reported a first-quarter profit pf $187.5 million with sales increasing 4.1 per cent compared to the same period in 2021 ($188.5 million).
“We’re off to a strong start in fiscal 2023 and are confident in the momentum and continued underlying strength across our businesses,” says Michael Medline, president & CEO, Empire. “We are very pleased with the recent launch of our Scene+Scene+ loyalty program in Atlantic Canada, a great start for a foundational element in our company’s success going forward.”
Same-store sales for the quarter rose 3.3 per cent, while same-store sales, excluding fuel, grew 0.4 per cent.
Medline says the company’s three-year business expansion strategy Project Horizon, now in its third year, is on track to achieve its goals: an incremental $500 million annualized EBITDA and an improvement in EBITDA margin of 100 basis points by fiscal 2023. In fiscal 2022, Empire says it achieved benefits from promotional optimization and data analytics, the continued expansion and renovation of its store network, and strategic sourcing efficiencies, noting that the benefits achieved in fiscal 2021 and fiscal 2022 were partially offset by the planned investment in its e-commerce network.
The company says it expects more benefits from strategic initiatives launched more recently as part of Project Horizon, including Scene+, the new loyalty program. Scene+ was launched in Atlantic Canada in August 2022. Additional regional launches are planned across Canada in calendar 2022 and into early calendar 2023. Empire says Project Horizon initiatives focused on loyalty, store optimization and customer experience will provide financial benefits in fiscal 2024 and beyond.
Store network expansions
Empire acquired Farm Boy on December 10, 2018, adding 26 locations to its Ontario store network with plans to double the store count in five years from the acquisition date, mainly in the Greater Toronto Area (GTA). As of September 14, 2022, Farm Boy has 44 stores and in fiscal 2023 the company expects to open four additional Farm Boy stores.
Empire announced plans to expand its FreshCo discount format to Western Canada in 2018 with expectations of converting up to 25 per cent of the 255 Safeway and Sobeys full-service format stores in Western Canada to the FreshCo banner. Empire opened one FreshCo store in Alberta during the first quarter of fiscal 2023 and expects to have 44 FreshCo stores in Western Canada by the end of fiscal 2023. Three stores are expected to open in Alberta in fiscal 2023.
Empire introduced its new e-commerce platform, Voilà, in fiscal 2021. It plans to have four CFCs across Canada by 2025 that will be to serve approximately 75 per cent of Canadian households representing approximately 90 per cent of Canadians’ projected e-commerce spend. The first CFC in Toronto began deliveries on June 22, 2020 and has been operating for over two years.
The second CFC in Montreal began deliveries to customers on March 7, 2022, beginning with a phased transition of customers to Voilà par IGA from IGA.net. The rollout was completed in the first quarter of fiscal 2023 and Voilà par IGA now services over 100 municipalities from Gatineau to Montreal to Quebec City. The Montreal
Crombie REIT has completed the construction of the building for Voilà’s third CFC in Calgary and has turned it over to Ocado to build the internal grid. The CFC will service the majority of Alberta, with deliveries expected to start in the first quarter of fiscal 2024. On February 7, 2022, Empire announced that its fourth CFC in Vancouver will start servicing customers in B.C. starting in calendar 2025.
In fiscal 2021, Empire launched Voilà curbside pickup, which currently services 98 stores in locations across Atlantic Canada, Ontario, Manitoba, Saskatchewan, Alberta and B.C. The curbside pickup solution is powered by Ocado technology and serves customers in areas where future CFCs will not, or are not yet, operating.
Empire says Voilà’s sales capture of the market continues to be strong. However, in the first quarter of fiscal 2023, overall e-commerce industry sales were lower than anticipated as restrictions eased and lockdowns were lifted compared to the prior year. In the first quarter of fiscal 2023, the four e-commerce platforms experienced combined sales decline of 21 per cent. The decrease was primarily due to elevated sales levels in the prior year during COVID-19-related lockdowns.