Canadian Manufacturing

Empire Company Ltd. to focus on supplier relationships amid rising costs

Empire said it expects that same-store sales will continue to be negative for the remainder of its 2022 financial year as industry volumes fall.

March 10, 2022   The Canadian Press

Empire Company Ltd. says it’s focused on its supplier relationships to ensure competitive pricing for customers as inflation continues to push up the cost of goods.

The parent company of numerous grocery chains including Sobeys, Safeway and FreshCo says its also using alternative sourcing options as it experiences supply chain challenges, primarily related to labour shortages caused by COVID-19.

The retailer made the comments as it reported a quarterly profit of $203.4 million, up from $176.3 million a year earlier, as its sales also climbed higher.

The grocer said the profit in what was its third quarter amounted to 77 cents per diluted share, up from 66 cents per diluted share a year earlier.

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“Our team delivered another outstanding quarter, including the highest (earnings per share) in memory,” Michael Medline, president and CEO of Empire, said in a statement.

“When you look at these results against the backdrop of the extremely volatile economic and retail environment, the strength of our team shines through.”

Sales in the 13-week period ended Jan. 29 totalled $7.38 billion, up from $7.02 billion, helped by the acquisition of Longo’s, higher fuel sales and increased food inflation as well as other initiatives.

Same-store sales excluding fuel fell 1.7 per cent compared with elevated sales last year.

In its outlook, Empire said it expects that same-store sales will continue to be negative for the remainder of its 2022 financial year as industry volumes fall compared with the unusually high COVID-19 driven sales levels a year ago.

Still, the company said it does not expect grocery consumer behaviour to fully return to pre-pandemic levels for the foreseeable future given the unpredictability of COVID-19.

Meanwhile, the grocery retailer said its earnings were lifted by the expansion and renovation of its store network.

Empire’s e-commerce platforms recorded a combined sales growth of 17 per cent, primarily driven by the acquisition of Grocery Gateway.

Its online grocery platform Voila also grew in the quarter, with improved volumes and plans to open new customer fulfilment centres, where robots assemble orders.

In addition to its location in Vaughan, Ont., the retailer says it entered the testing stage for its second customer fulfilment centre in Montreal earlier this month. A third location in Calgary is expected to come online in 2024 with a Vancouver-area facility slated to open in 2025.