Empire posts Q3 loss as it takes charges tied to Voilà closure in Alberta
Empire Co. Ltd. posted a loss in its latest quarter as one-time charges related to the closure of its Voilà grocery delivery facilities in Alberta took a toll on its bottom line.
"While this impacted reported earnings, it resets the cost structure and sharpens our focus on profitable growth," CEO Pierre St-Laurent told analysts on the company's fiscal third-quarter earnings call on Thursday.
Sobeys' parent company had warned it would take a large writedown after it announced in January it was closing its Voilà grocery distribution centres in Alberta and pausing the online service's expansion in the Vancouver area.
Empire, which also owns Safeway, IGA and Farm Boy, reported a loss of $385 million of $1.68 per diluted share in the quarter ended Jan. 31 as it recorded an e-commerce impairment charge of $746 million.
The loss compared with a profit of $146 million or 62 cents per share a year earlier.
On an adjusted basis, Empire said it earned 72 cents per diluted share in the quarter compared with an adjusted profit of 62 cents per diluted share in the same quarter last year.
The grocer had said changes to its Voilà operations were expected to deliver about $95 million in annualized operating income.
St-Laurent told investors during the call that two-thirds of the anticipated savings will flow through to the bottom line, while the remainder will be reinvested in growth initiatives.
The company is focusing on simplifying its operations across segments such as IT, marketing and supply chain, the CEO said.
It's looking into smaller, quick steps it can take to improve efficiency, such as investing in supply chain technology and electronic shelf labels.
He said digital labels, for instance, simplify day-to-day pricing and merchandise decisions in store aisles.
"It's many small, little things that are driving benefits right now," St-Laurent said.
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Meanwhile, the company plans on opening more grocery stores, with a continued tilt toward discount banners.
Customers are still shopping for deep discounts and promotions amid ongoing economic uncertainty and high food prices—a shift that has pushed other major grocers to also expand their discount store footprint over the last few years.
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The grocer reported its same-store sales were up 1.2%, while same-store food sales gained 2%.
Sales in its third quarter amounted to $7.89 billion, up from $7.73 billion a year earlier.
Food sales rose 3%, while the company says fuel sales fell 11.4% primarily due to lower prices driven by the removal of the government carbon tax.
