As it reported its strongest sales in almost ten years for the third quarter of fiscal 2019, Empire Co. also confirmed plans to open 12 new FreshCo locations in B.C. and Manitoba in 2019.
Ten new FreshCo stores will open in B.C. this year and two in Manitoba, Empire reports, depending on the timing of construction schedules and permits.
Over the next several years, Empire expects to convert up to 25 per cent of its 255 Safeway and Sobeys full service format stores in Western Canada to its FreshCo discount format. A favourable labour decision in January by a special officer appointed by the B.C. government allowed Empire to offer voluntary buyouts to eligible long-service B.C. Safeway employees. The company says this means it can move ahead with the discount expansion.
Five B.C. stores which closed in July of last year will be converted to the FreshCo format, along with a further five B.C. stores announced on January 29, 2019.
Quarterly sales, profit up
For the third quarter of fiscal 2019, Empire reported 3.3 per cent growth in same store sales excluding fuel. Excluding pharmacy also, the growth was 3.9 per cent. Figures for the same quarter in 2018 were 1.1 per cent excluding fuel and 1.4 per cent excluding fuel and pharmacy. Figures included eight weeks of operations at Farm Boy stores – Empire completed its acquisition of Farm Boy in December.
Tonnage – units sold – grew for the third consecutive quarter, rising 1.5 per cent – the best growth in the metric in 34 quarters.
Gross profit for the quarter was $1.51 billion on $6.25 billion in sales, up from $1.44 and $6.03 billion respectively for the same quarter last year. Higher sales, the incorporation of Farm Boy results and early benefits from category changes under the Project Sunrise corporate transformation contributed to the profit growth. That growth was partially offset by store closures in Western Canada and lower pharmacy margins.
“Our execution continued to improve this quarter, building on our run of positive tonnage growth and strong same-store sales across the country,” said Michael Medline, Empire president and CEO. “Sales were the strongest we have seen in almost ten years. Improving margin rates in the third quarter are a harbinger of more progress to come as category reset changes start flowing through to our bottom line.”
Medline added that Empire has gone from losing market share, to holding the line, to now beginning to win market share back – “a big turn in a short period of time.”
Empire views Farm Boy as a key weapon in its drive to expand in the Greater Toronto Area – along with a forthcoming robot-enabled online delivery fulfilment centre. Medline told analysts during a conference call that Farm Boy is now one of Empire’s best performing stores, and that customer reception in Toronto has been resoundingly positive.