Empire reports higher sales and profit as it adds locations, focuses on discount

Customers enter and leave a Sobeys store in Toronto. Parent company Empire said sales grew in both its discount and conventional grocery stores last quarter.Graeme Roy/The Canadian Press

Sobeys parent Empire Co. Ltd. EMP-A-T reported growth in sales and profits in the first quarter, as the company continued to expand its grocery locations across the country and cut costs.

The Stellarton, N.S.-based retailer, which owns chains including Sobeys, Safeway, IGA, Farm Boy and discounter FreshCo, reported its sales grew to nearly $8.5-billion in the quarter ended Aug. 1, up 2.6 per cent compared to the same period last year.

Empire said sales grew in both its discount and conventional grocery stores. Still, like other major grocers, Empire has noted that shoppers continue to visit discount stores more frequently, and has committed to building more off-price locations in response.

Last month, the company opened two new FreshCo stores in Atlantic Canada – its first locations under that discount banner in the region. Empire plans to open 13 more FreshCo stores across the country this fiscal year.

Same-store sales – which track the performance of locations open for more than a year, and excludes the sales impact of store closings or new openings – grew by 1.2 per cent at the company’s grocery locations.

Net earnings grew to $233-million or $1.04 per share in the first quarter, compared to $212-million or 91 cents per share in the same period last year.

Fuel sales at Empire’s gas stations rose by 18.4 per cent in the quarter, as the conflict in the Middle East pushed gas prices higher.

E-commerce sales grew by 11.3 per cent year-over-year. Empire’s online strategy is evolving, after it shut down its Voilà e-commerce facilities in Alberta earlier this year, and took a $746-million writedown on the business, saying the financial results fell short of expectations.

Empire opted to end its exclusive relationship with e-commerce technology partner Ocado earlier than expected. Since then, the company has begun working with third-party delivery services Instacart, Uber Eats and Door Dash, which contributed to the growth in online sales in the quarter.