Empire Co. Ltd. reported had a record-high earnings per share for its first quarter, despite what the grocery company called a "challenging" market environment.
The parent company of grocery chain Sobeys Inc. on Thursday released its financial results for the first quarter ended Aug. 1, net earnings of $233 million, a 9.9 per cent jump from the prior year, while earnings per share climbed 14.3 per cent to $1.04 per share.
"The market environment remains challenging, and consumers continue to be focused on value and affordability, given fuel price volatility and ongoing trade-related uncertainty," chief executive Pierre St-Laurent said during Thursday's earnings call.
The CEO said fellow retailers across North America are reporting a more cautious customer environment, with many of the same trends also seen in Canada.
St-Laurent said that against this backdrop, Empire is gaining share in full service while maintaining its position in discount, despite the rapid expansion of discount formats across the market.
He said that as the company continues to expand its discount footprint, they expect that growth to increasingly support market share gains in the channel.
As for the trade war , the recent escalation in tension between Canada and the U.S. has only increased customer interest in supporting Canadian businesses and products, which is something his company is also passionate about, said St-Laurent.
"While purchasing decision will continue to be driven by value, quality and convenience, we believe our deep Canadian roots, long-standing relationship with Canadian suppliers and portfolio of locally operated banners position us well to serve customers in this environment," he said.
He added that Empire, "as a proud Canadian company," will continue to invest across the country through new stores, new jobs, local supplier partnership and ongoing growth of the business.
The chief executive said they're seeing "very encouraging improvement" in price perception and growing recognition across its banners, such as Sobey's, FreshCo, Safeway, IGA, Farm Boy and Longo's.
The retailer's sales for the first quarter were up 2.6 per cent to almost $8.5 billion. This includes a 1.7 per cent increase in food sales driven by full-service and discount banners and an 18.4 jump in fuel sales due to higher fuel prices.
As customers increasingly get their groceries delivered to their homes, total e-commerce sales across Empire's platforms and third-party partnerships combined increased 11.3 per cent year-over-year. This was primarily driven by sales growth in deliveries with Instacart, Uber Eats and DoorDash, and continued sales growth for Voilà.
Same-store sales grew 2.2 per cent from 1.8 per cent the previous year. Same-store sales growth for food was 1.2 per cent, down from 1.9 per cent a year ago, while same-store sales for fuel grew 18.9 per cent, up from a decline of 13.4 per cent.
St-Laurent said Empire's gross margin, excluding fuel, was essentially flat compared to last year's, which is in line with the company expectations, given the strong prior year comparison, higher supply chain costs and elevated fuel-related expenses during the quarter.
"Despite those headwinds, we were pleased with the performance of the core business," he said.
The company's EBITDA increased to $712 million from $671 million in the prior year mainly as a result of higher sales and gross profit and lower selling and administrative expenses.
