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Empire focuses on supplier relationships amid increasing costs

Company says it is also turning to alternative sourcing options to deal with supply chain challenges

Empire Company Ltd. says it's focused on its supplier relationships to ensure competitive pricing for customers as inflation continues to push up the cost of goods.

The parent company of numerous grocery chains including Sobeys, Safeway and FreshCo says its also using alternative sourcing options as it experiences supply chain challenges, primarily related to labour shortages caused by COVID-19.

The retailer made the comments as it reported a quarterly profit of $203.4 million, up from $176.3 million a year earlier, as its sales also climbed higher.

The grocer said the profit in what was its third quarter amounted to 77 cents per diluted share, up from 66 cents per diluted share a year earlier.

"Our team delivered another outstanding quarter, including the highest (earnings per share) in memory," Michael Medline, president and CEO of Empire, said in a statement.

"When you look at these results against the backdrop of the extremely volatile economic and retail environment, the strength of our team shines through."

Sales in the 13-week period ended Jan. 29 totalled $7.38 billion, up from $7.02 billion, helped by the acquisition of Longo's, higher fuel sales and increased food inflation as well as other initiatives.

Same-store sales excluding fuel fell 1.7% compared with elevated sales last year.

In its outlook, Empire said it expected that same-store sales would continue to be negative for the remainder of its 2022 financial year as industry volumes fall compared with the unusually high COVID-19 driven sales levels a year ago.

Still, the company said it did not expect consumer behaviour to fully return to pre-pandemic levels for the foreseeable future given the unpredictability of COVID-19.

Meanwhile, Empire said its earnings were lifted by the expansion and renovation of its store network.

Empire's e-commerce platforms recorded a combined sales growth of 17%, primarily driven by the acquisition of Grocery Gateway.

Its online grocery platform Voilà also grew in the quarter, with improved volumes and plans to open new customer fulfillment centres, where robots assemble orders.

In addition to its location in Vaughan, Ont., the retailer says it entered the testing stage for its second customer fulfillment centre in Montreal earlier this month. A third location in Calgary is expected to come online in 2024 with a Vancouver-area facility slated to open in 2025.

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