Sobeys parent Empire beats profit growth estimates, raises dividend
Grocery retailer Empire Co. Ltd. EMP-A-T beat analysts' estimates for profit growth in the fourth quarter, reporting that its store chains such as FreshCo and Sobeys took market share from competitors.
The Stellarton, N.S.-based company reported on Thursday that sales grew in both the company's FreshCo discount stores, as well as its full-service grocery stores such as Sobeys, Safeway and IGA. Same-store sales – an important industry metric that tracks sales growth not tied to new store openings – were up 3 per cent in the quarter ended May 3, compared to the same period last year.
Empire reported net earnings grew to $173-million or 74 cents per share in the fourth quarter, compared to $149-million or 61 cents per share the prior year. That exceeded analysts' expectations of $164.5-million or 71 cents per share, according to the consensus estimate from S&P Capital IQ
The company also announced a 10-per-cent increase in its quarterly dividend paid to shareholders.
Fourth-quarter sales grew to $7.6-billion, up 3 per cent compared to the prior year, driven by strong performance at grocery stores, partly offset by lower sales at the company's gas stations as fuel prices fell.
The expansion of the Farm Boy and FreshCo store chains contributed to profit growth, as did initiatives aimed at reducing 'shrink,' an industry term for products that are lost before they can be sold – such as through theft or spoilage.
This time last year, Empire made the decision to pull back on the pace of expansion of its Voilà e-commerce service, saying the market for online groceries in Canada was smaller than expected. After ending its exclusive partnership with technology provider Ocado Group PLC earlier than planned, Empire launched partnerships with third-party delivery companies Instacart and Uber Eats, which have contributed to growth. Online sales rose by 80.2 per cent in the quarter.
The company continues to cut costs in its online service as it seeks to reach profitability. Construction of a fourth e-commerce distribution centre, underway in Vancouver, remains on hold, and will resume 'once e-commerce penetration rates in Canada increase,' according to a press release issued on Thursday.
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