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Empire launches aggressive three-year growth strategy

Following the completion of Project Sunrise, Sobeys parent company has its sights set on a new "Horizon"
(CNW Group/Sobeys Inc.)

With its $500-million cost-cutting plan Project Sunrise officially complete, Empire Company Limited has announced the launch of a second, three-year, strategic initiative called Project Horizon.

In a press release issued Wednesday morning, Sobeys parent company said it would invest approximately $2.1 billion to improve store productivity, scale up e-commerce, expand its private label portfolio, continue the FreshCo expansion in Western Canada and open eight Farm Boy locations in Ontario.

Empire said growing market share and “building on its cost and margin discipline” would help it drive $500 million in annualized earnings by the end of fiscal 2023. The financial target does not include impacts related to the COVID-19 pandemic.

A large part of Empire’s focus over the last couple years has been its entry into the e-grocery game and the construction of customer fulfillment centres (CFC) in Toronto and Montreal. Online will continue to be a major priority for the company over the next three years as it looks to "win Canadian grocery e-commerce."

Sobeys grocery delivery service Voilà, which is powered by British company Ocado, rolled out to parts of the Greater Toronto Area earlier this summer. It’s launch was accelerated by the COVID-19 pandemic and a surge in demand for delivery.

While Empire CEO Michael Medline has maintained over the years that automated warehouses are the more efficient way of fulfilling online grocery orders, Empire will start to introduce a store-pick model to serve customers in areas where Voilà isn’t available yet. It will test the store-pick model in Nova Scotia before expanding it across Canada.

Empire will also accelerate the building of two CFCs in Western Canada. The company said its investment in Voilà for fiscal 2021 would be approximately $65 million.

Medline launched Project Sunrise not long after he started with the company in 2017. During Empire's most-recent earnings call with analysts, Medline said the company had hit all of its targets on time and was $50 million ahead of where he thought it would be when it began the initiative.

Despite Empire's achievements under Project Sunrise, Medline said there was still "substantial value to unlock through Project Horizon." And as the Canadian retail landscape continues to shift in reaction to the COVID-19 pandemic, Medline said it was clear that Empire had to serve its customers "where, when and how they want to shop."

"We will invest in our core store business to drive growth and will move much faster with Voilà customer fulfillment centres and a new, exciting store pick solution, using Ocado technology," said Medline.


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