Empire Company Limited reported strong financial performance in its fourth quarter with same-store sales surging18% and profits growing 43%. That growth was supported by savings from the completion of the company’s three-year transformation plan, Project Sunrise, in which the company says it exceeded its expectations of $500 million in net benefits, achieving savings of more than $550 million. Close to half of the savings were achieved in fiscal 2020 in which the company reported more than $250 million of “in-year benefits” from Project Sunrise.
"This is one of our proudest quarters in Empire's 113-year history," said Michael Medline, president and CEO. "Our 127,000 teammates across the country gave their all to keep our customers safe and healthy and our grocery shelves stocked during the unprecedented coronavirus pandemic. Due to their herculean efforts, our company saw significant market share increases. Our team has also surpassed our Project Sunrise turnaround targets. This three-year transformation is one of the most significant turnarounds in Canadian retail history."
Profits grew to $181.2 million compared to $126.5 million in the same quarter of 2019.
The COVID-19 impact
Empire Company reports that COVID-19 impacted performance, noting that fourth quarter same-stores sales growth was “substantially driven by changing customer shopping patterns throughout the pandemic including a shift in consumption from restaurants and hospitality businesses to grocery stores. Sales were significantly higher in all formats except fuel.”
Empire Company introduced it’s “Hero Pay” program for frontline employees in stores and distribution centres, which ended on June 13, 2020 and was followed by a one-time bonus equal to two weeks of Hero Pay.
Empire says that costs associated with the measures it took during the pandemic increased the company’s expenses by approximately $80 million in the fourth quarter of fiscal 2020, “partially offsetting the positive effect of increased sales.”
Empire acknowledged in its reporting that the future impact of COVID-19 is “uncertain and dependent on the duration, the spread and intensity of the virus, and ultimately, when a vaccine is widely accessible. The Company's balance sheet continues to remain strong with significant free cash flow available.”