Sobeys’ Owner Jumps Most in 17 Years As Grocer's Turnaround Accelerates
The worst seems to be over for Canada’s Empire Co., the owner of the Sobeys grocery chain that’s embarked on a multi-year plan to cut costs and win back customers.
Rising food inflation and cost discipline helped the Stellarton, Nova Scotia-based company post earnings that beat the highest analyst estimate for the quarter ended Aug. 5. Shares jumped 15 percent to C$22.75 at 11:12 a.m. in Toronto, the biggest intraday rise since March, 2000.
While the company’s market share erosion has stopped, future earnings won’t all be this strong, Chief Executive Officer Michael Medline warned.
“We still have significant work to do in all facets of our business, and we are obviously working to build more consistency in our sales and earnings improvements,” he told analysts on a call.
The company, which lost clients as it struggled to integrate Canadian stores it purchased from Safeway Inc. in 2013, said it’s seeing a bounce back in Western provinces including Alberta. While it’s running profitable e-commerce operations in Quebec, the grocer said it has time to define its online strategy despite reports that Amazon.com plans to roll out its Prime Now delivery service for groceries and other items in Canada later this year.
“I faced them before in hard goods and soft goods and watched them unfold and what they’ve done to the retailer for years in the States, and it was just a matter of time, obviously, before they came to Canada,” Medline said of Amazon.
“At the same time, bricks-and-mortar, for a long period of time, is going to rule in terms of market share,” Medline said. Empire has the strength to grow it’s market share in e-commerce and profit from it, he said.