Empire accelerates store openings, remains confident in full-service grocery
Empire Company is increasing the number of new stores it plans to open in its fiscal 2027.
The parent company of Sobeys, Safeway, FreshCo and other food and pharmacy chains plans to open more than 25 new stores, up from its previous forecast of 20.
That includes 13 new FreshCos across Western Canada, Ontario and Atlantic Canada.
“As we continue to expand our discount footprint, we expect that growth to increasingly support market shrinking in the channel,” Pierre St-Laurent, president and CEO of Empire and Sobeys Inc., said on the retailer’s first quarter earnings call Thursday (Sept. 10).
St-Laurent said Empire gained share in full-service and discount in the quarter as its competitors Loblaw Companies and Metro rapidly add more low-cost supermarket formats to their networks.
Earlier this month, Loblaw said it was increasing the number of new stores it plans to open this year to 75, up from its previously announced 70. The expansion is primarily focused on its discount banners No Frills and Maxi.
Empire opened four new stores in its Q1, in addition to four Mayrand locations.
The company’s discount banner FreshCo recently opened its first stores in Atlantic Canada as well as two locations in Calgary. Empire's full-service banner Safeway recently opened a two-level flagship store in Vancouver.
“We're investing capital for the long term, not for next week. We're looking at opportunities, market by market,” St-Laurent said. “We remain confident that in the future things are going to improve. We're doing the right thing. We're very disciplined in our approach in everything we do at Empire, and it is going to benefit us over time. We're very confident about that. Everybody has a different strategy. We believe in our strategy, obviously, and early results of our new store openings are very encouraging.”
Empire reported net earnings of $233 million in its first quarter, up from $212 million last year.
Sales increased 2.6% to $8.48 billion.
Food sales came to $7.92 billion, up 1.7%. Same-store food sales increased 1.2%
“The market environment remains challenging, and consumers continue to be focused on value and affordability, given fuel price volatility and ongoing trade-related uncertainty across North America,” St-Laurent told analysts. “Retailers are reporting a more cautious customer enrollment, as we are seeing the same.”
“Buy Canadian” movement reignited
St-Laurent said the escalation of U.S-Canada trade tensions has “increased customer interest in supporting Canadian businesses and products.”
The chief executive said Empire is well-positioned to serve those consumers at its full-service grocery stores.
“In our full-service banners, we have the largest assortment. This is very convenient for customers when they are looking for alternatives to U.S. products,” St-Laurent said. “We feel even better now than 18 months ago when we had the first counter-tariff situation.”
READ: Grocery leaders talk counter-tariffs, navigating trade tensions
Luc L’Archevêque, chief customer officer, said the tariffs have had little impact on the company this time around.
“Very much less categories are impacted. We know there's a sentiment out there from the customer to buy Canadian products, but it's too early to see any signs of that in our Q1 data. If things continue that way, we do believe there could be an upswing on Canadian products for sure,” L’Archevêque said.
He said “less than a handful” of suppliers have reached out with tariff-related cost increase requests.
“Our position will remain the same as the first time around: that it's too early, so we won't accept any cost increases related to tariffs. We'll work very closely with our supplier partners to find solutions so that we don't impact our customers and we defend the value that we provide to our customers. We have some experience now and better tools, so we're gonna react faster than the first time around.”
More Q1 call highlights
On Empire’s pharmacy investment:
“We continue to strengthen our pharmacy business, which remains an attractive growth platform for Empire… Last month, we announced the acquisition of nine Morelli’s pharmacies co-located with Longo’s stores in Ontario. These pharmacies will be integrated into our national pharmacy operations and rebranded as [under the Longo’s Pharmacy banner]. While the acquisition is modest in size, strategically, it is important. It expands our network in a market where we already have strong customer relationships and reflects our disciplined approach to growing this business through both organic initiatives and targeted acquisitions.”
On Quebec sales amid strike at Metro Inc. fruit and vegetable distribution centre:
“At the beginning of the strike, we saw a slight positive impact in produce in Quebec [in Q4], but it took, as usual, two to three weeks [for Metro] to put in place a strong contingency plan, like we did in the past… Since then, no significant impact.”
