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Empire shows solid growth, Project Horizon off to a strong start

From store remodels and the launch of curbside pickup to its expansion out West, fiscal 2021 is off to a promising start

In July, Empire announced Project Horizon, an ambitious plan to accelerate e-commerce and grow market share. And while it's only been a few months, the three-year initiative is already starting to (pardon the food pun) bear fruit.

As part of Project Horizon, Empire has introduced its Voilà by Sobeys e-grocery service to parts of the Greater Toronto Area, began testing curbside pickup at stores in Nova Scotia, opened seven FreshCo stores in the West and launched a national brand campaign for its Compliments private-label brand.

"The momentum at Empire–at all levels of the company–is remarkable," said Empire president and CEO Michael Medline, while discussing its first-quarter results on Thursday. "The team is moving with velocity and is laser-focused on our Project Horizon goals."

On Thursday, the national grocer, based in Stellarton, N.S., reported its first-quarter profit rose nearly 50% compared with a year ago as its sales climbed 9%. The grocer said it earned $191.9 million for the quarter ended Aug. 1, up from a profit of $130.6 million a year earlier. Sales in the 13-week period totalled $7.35 billion, while same-store sales were up 8.6%.

Project Horizon is a follow up to the three-year transformation called Project Sunrise that wrapped up earlier this year and delivered $550-million in annualized savings, $50 million more than Empire's original target. Medline said Project Horizon could delivery an incremental $500 million in savings by the end of fiscal 2023.

"When we launched Project Sunrise we had a few doubters, many thought we couldn't do it, they discounted our goal, said the savings wouldn't dropped to the bottom-line," said Medline. "But our team came through and we proved them wrong. We delivered on-time, above-target, and above-expectations, and we plan to do so again."

"Project Horizon is just as bold and equally as ambitious ," he added. "We know we have a lot of work in front of us to get to the $500 million, but we are much more optimistic now than we were three years ago."

Project Horizon includes revitalizing the majority of its stores over the next seven years. So far this quarter, Empire has made modifications to 21 stores.

"Our renovations will range from a refresh to a full reset of the store, but at a minimum, you will see enhancements to the core and modifications to our key departments to better support our strategy," said Medline.

As part of Project Horizon, Empire will also spend more than $300 million to renovate or open 10 to 15 new FreshCo stores in the West and eight Farm Boy stores in Ontario, said chief financial officer Michael Vels.

From bricks and mortar to digital, Empire is determined to win the Canadian e-grocery game. Empire will invest approximately $65 million in Voilà this year, part of which will go to its share of building a customer fulfillment centre in Montreal, said Vels.

Empire launched Voilà by Sobeys e-grocery service--powered by British company Ocado--earlier than planned to meet pandemic-related consumer demand, said Medline. Customer feedback has been overwhelmingly positive and those positive shopping experiences are translating into repeat behaviour and word of mouth referrals, he said.

"This, coupled with a strong marketing campaign blanketing the GTA, has meant steady and strong week-over-week order volume growth," said Medline. "We're delivering best-in-class customer service with near perfect on-time and fulfillment rates."

While Medline has long maintained that automated warehouses are the more efficient way of fulfilling online grocery orders, the company has been testing curbside pickup at stores in Nova Scotia. Empire eventually plans to rollout the service to areas across the country that will never have a CFC, or use curbside as a stopgap until e-grocery is available in that market, said Medline.






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