Empire CEO on discount expansion, broader banner growth ahead
Empire Company Limited reported 3.4% growth in food sales in its latest quarter, citing increased customer traffic and basket size in store as contributing factors. Same-store sales grew by 2.5% and full-service same-store sales grew by more than 2% this quarter.
“Overall, the Canadian customers continued to be very resilient but value focused,” said Pierre St-Laurent, president and CEO, Empire, in a conference call on Dec. 11.
The conference call highlighted four key areas of focus for the remaining quarters: customers, stores, growth and cost control.
The company reports it earned $159 million in its latest quarter, down from $173 million in the same quarter last year. While sales for its second quarter totalled $8 billion, up from $7.8 billion in the same quarter last year.
Empire’s discount banners continued to perform well in Q2, gaining market share in its respective channel.
“We are underdeveloped in discount, so we will grow discount. But we won't just focus on discount because there's other markets where [...] there's more opportunity to grow our Farm Boy, our Longo's, our Foodland,” said St-Laurent.
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Growth of the company’s banners regionally continues to be a focus to improve market share.
St-Laurent spoke of the opportunities for banner growth in Quebec and Ontario. He also noted good market share in Atlantic Canada, where the company continues to invest to stay relevant. In Western Canada, St-Laurent noted they are on track to grow to 65 banner locations.
St-Laurent added, “it’s nice to see we don’t have the same market share region-by-region. We don’t have the same penetration banner by banner. This gives us the opportunity to grow more than if we have only one banner.”
Constantine Pefanis, executive vice-president & CFO, Empire, spoke on improving sales productivity in various regions using its banners. As an example, he pointed to the of opening a Toronto Farm Boy location down the street from an existing one, which resulted in an immediate increase in sales.
“Those are the opportunities that we're constantly looking at. From my perspective, it also comes down to capital allocation and the ability to identify areas of the business where we can grow potentially through joint ventures, acquisitions, things that are going to give us a lever for the future,” said Pefanis.
Empire’s reported CPI for food purchased from stores was 3.7% this quarter, which falls under its internal CPI number.
The retailer’s Q2 capital expenditure totalled $205 million and has been attributed to the renovation and construction of new stores, investments in advanced analytics technology and other technology systems.
“We remain on pace to spend $850 million on CapEx in fiscal 2026 with approximately 50% of this investment being allocated to store renovations and new store expansion,” said Pefanis.
“On the capital investments we're making at store level, you will see a shift on new stores. We'll be more efficient in our renovation. We believe that we can renovate more stores, less costly, and we will reshuffle that investment on new stores in a profitable way,” added St-Laurent.
Pefanis notes that when Mohit Grover, Empire’s senior vice-president of innovation, sustainability & strategy, took on leadership for the company’s e-commerce business in July 2023, he was tasked with improving overall profitability.
As a result, in 2024, Empire ended its mutual exclusivity with Ocada CFC, the U.K. tech partner behind Voilà, to allow for partnerships with third-party customer fulfilment centres.
“The thing we learned is that e-commerce is multichannel. At the beginning, we were all-in with Voilà. Right now, we decided to end the exclusivity to be part of the third-party business,” said St-Laurent.
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When it comes to the retailer’s supply chain demands, St-Laurent said the company has the capacity to meet consumer needs.
“We have three fully automated RFCs [...] We made recent investments in Alberta in automation, we're looking at improving our network in Atlantic Canada right now. So we have multiple projects ahead of us to continue to improve the supply chain,” said St-Laurent.
Looking forward, St-Laurent said the focus for Empire will be developing a refreshed strategic plan that will guide our priorities longer term.
“As you get to know me, you will learn that I'm always looking for where we can improve in both my personal and professional life and driven by performance. That sense of accomplishment you feel when you achieve an objective that was previously deemed unattainable,” said St-Laurent.
