Sobeys Inc.’s parent company, Empire Company Ltd., recognized net sales and same-store sales gains for its first quarter of fiscal 2023, but did not reach the earnings per share estimate for analysts, despite an improvement from a year ago.
For the quarter ended Aug. 6, retail food sales totaled $7.94 billion (Canadian), up 4.1% from $7.63 billion a year earlier, reported yesterday Empire, based in Stellarton, Nova Scotia. The increase was primarily driven by higher fuel sales and food price inflation, as well as benefits from the Project Horizon strategic plan, including FreshCo’s expansion into Western Canada, partially offset by COVID restrictions -19 in place for part of the first quarter of fiscal 2022, the company said.
Same-store sales rose 3.3% year-over-year in the first quarter of 2023, but were up 0.4% excluding fuel, according to Empire.
The results compare to a 3.7% increase in retail food sales and a 0.5% decline (-2.2% excluding gasoline) in same store sales for the first quarter of the Fiscal 2022. First-quarter 2023 comparison store sales also improved from a 0.1% decline (-2.5% excluding fuel) in the fourth quarter of Fiscal 2022.
“We are off to a strong start for fiscal 2023 and are confident in the momentum and continued underlying strength of our business,” Empire President and CEO Michael Medline said in a statement. . “We are very pleased with the recent launch of our Scene+ loyalty program in Atlantic Canada, an excellent start for a fundamental element of the success of our business in the future. »
The continued expansion of Sobeys’ commercial footprint also remains a priority. The retailer opened the first of three FreshCo discount grocery stores in Alberta during the first quarter and plans to have 44 FreshCo stores in Western Canada by the end of fiscal 2023. Similarly, Sobeys aims to open four Farm Boy fresh produce stores this fiscal year. . When it acquired Farm Boy in 2018, the company added 26 locations to its store base in Ontario and said it planned to double the number of banner stores – currently at 44 – in five years, primarily in the Greater Toronto Area.
Empire reported that in the first quarter of fiscal 2023, its e-commerce platforms – led by online grocery delivery service Voilà – experienced a combined sales decline of 21%, in part due to the cycle of high sales levels driven by the pandemic in the prior year period. However, the company said the performance is set to change as it continues to grow the Voilà fulfillment network through its partnership with UK-based online grocery specialist Ocado Group.
Plans call for four Ocado-powered fulfillment centers (CFCs) across Canada. The first CFC in Toronto began deliveries in June 2020 and has been operating successfully for more than two years, Empire noted. The second CFC in Montreal launched deliveries last March as part of a gradual transition of customers to Voilà by IGA from IGA.net. Construction of the third CFC in Calgary, Alberta has been completed and will now be contracted to Ocado to build the internal network. This facility, which is expected to serve most of Alberta, is expected to begin deliveries in the first quarter of fiscal 2024. Empire announced in February that the fourth CFC will be located in Vancouver, British Columbia, and will begin deliveries in the province in calendar year 2025.
A curbside pickup service piloted by Ocado is also offered at 98 stores. In tandem with Ocado’s four CFCs and hub-and-spoke facilities, Empire expects its online grocery delivery and pick-up services to serve approximately 75% of Canadian households, accounting for approximately 90% of spending. esteemed by Canadians when it comes to e-commerce.
Ultimately, Empire reported net income of $187.5 million, or 71 cents per diluted share, in the first quarter of fiscal 2023, compared to $188.5 million, or 70 cents per diluted share, one year ago. Prior to the company’s first quarter report, analysts had on average forecast adjusted earnings per share of 74 cents, with estimates ranging from 72 cents to 78 cents, according to Refinitiv.
Empire’s food retail network, operated through its Sobeys Inc. arm, spans more than 1,900 food, drug and convenience stores in all 10 provinces under such as Sobeys, Safeway, IGA, Foodland, FreshCo, Thrifty Foods, Farm Boy and Lawtons Drugs. The retailer also operates more than 350 gas stations and manages grocery e-commerce operations under the Voilà, Grocery Gateway, IGA.net and ThriftyFoods.com brands.