Sobeys/FreshCo parent company Empire releases earnings report

Growing grocery delivery business and other opportunities

The company also said it was halting construction on a new fulfillment center to cut costs in its grocery delivery business. Voilà, those are just a few of the changes it’s making.

“While Voilà’s market penetration remains strong, the size and growth of the Canadian grocery e-commerce market has been lower than expected, resulting in higher dilution to net earnings than originally estimated,” Empire said in a press release. The company said it is focused on increasing volume and efficiency at its three existing centers.

Empire also prematurely ended a cross-exclusivity agreement with technology provider Ocado, as part of changes it made to reduce costs and increase flexibility. The changes are expected to “have a significant, positive impact on Voilà’s profitability in fiscal 2025 and 2026,” Empire said.
The company reported earnings per diluted share for the 13-week period ended Aug. 3 of $0.86.

The result was lower than earnings of $1.03 per diluted share in the same quarter last year, when net income increased due to the sale of 56 gas stations in Western Canada.

Analysts assess Empire’s quarter

RBC analyst Irene Nattel said Empire’s operating results were “slightly above expectations as value-seeking consumer behavior stabilizes.” She said in a note that the company continues to execute on its strategy of maximizing revenue in its full-service stores despite broader momentum in discount stores, although she added that Empire is also expanding its presence in discount stores. Nattel has previously said that Empire is overexposed to the full-service portion of the grocery sector compared with its peers, giving it a relative disadvantage amid heightened price sensitivity.

The company’s first-quarter sales totaled $8.14 billion, compared with $8.08 billion a year earlier. Same-store sales for the quarter rose 0.5%, while same-store sales excluding fuel rose 1%.

Medline said that a year and a half after completing its Canada-wide rollout of Scene+, the program has more than 15 million members, with those members spending an average of 55 per cent more than non-members. “Scene+ has significantly increased our incremental sales and margins compared to our previous loyalty program,” he said.

On an adjusted basis, Empire said it earned $0.90 per share in the latest quarter, compared with an adjusted profit of $0.78 per diluted share in the same quarter last year. Empire shares closed up 5.6% at $40.62 on the Toronto Stock Exchange.