Sobeys, the guardian firm of Empire, raises dividends after rising earnings within the final quarter


Increased gasoline gross sales and rising meals inflation have contributed to increased revenues

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Empire Co. Ltd., the guardian firm of Sobeys, is elevating its dividend by 10% after rising earnings within the final quarter, based on a income replace.

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The Stellarton, NS-based meals chain posted $ 178.5 million in $ 7.8 billion in fourth-quarter gross sales on Might seventh. Gross sales rose 13.3% within the quarter, which the corporate stated was largely as a result of the truth that the fourth quarter of Empire this quarter included 14 weeks, up from 13 weeks in This autumn 2021.

Empire additionally stated increased gasoline gross sales and meals inflation helped enhance income, together with its three-year Horizon Mission, which led to enlargement in western Canada and Ontario. Gross sales on the similar shops – a efficiency indicator utilized in retail that ignores the outcomes of just lately opened or closed shops – fell by 0.1%.

Empire’s earnings for that quarter have been about 4 p.c increased than the earlier yr. Earnings per share of 68 cents within the quarter have been one cent forward of expectations, based on a preview word by Scotiabank analyst Patricia Baker.

The outcomes come as Canadian shoppers face the most important meals value inflation in a long time. In its June 22 Client Value Index report, Statistics Canada stated Might meals payments rose 9.7 p.c year-over-year, linking the April inflation charge to the sharpest rise in costs. to meals since 1981.

Grocers say they’ve confronted a wave of requests from suppliers, all making an attempt to boost costs. The massive grocery chains rejected a few of these requests, and suppliers protested by pulling merchandise off the cabinets – most famously within the case of Frito-Lay vs. Loblaw.

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Regardless of the rejection, most of the wholesale value will increase are clearly leaking to shoppers. Statistics Canada discovered that costs for recent greens rose by 10.3% in Might in comparison with final yr. Edible fat and oils elevated by 30%, whereas spices, spices and vinegar elevated by 20.6%.

As tensions rise within the meals trade, Empire CEO Michael Medline has positioned his firm as a extra supplier-friendly choice. For the previous two years, Medline has stood out in Canada’s meals oligopoly for its willingness to criticize its rivals’ remedy of suppliers. Firstly of the pandemic, he described Loblaw and Walmart as “disgusting” to cost suppliers additional to assist pay for his or her community upgrades.

In its June 22 income replace, Empire acknowledged that the trade is dealing with inflationary pressures and stated it’s “targeted on provider relations and negotiations to make sure aggressive costs for shoppers.”

Empire’s gross margin fell within the fourth quarter to 25.6% from 25.9% the earlier yr. The corporate blamed its decrease revenue margins on the “impact of upper gasoline gross sales, increased provide chain prices” and extra prices related to a three-month strike at a Quebec distribution heart that ended. final month.

Empire, which additionally owns IGA, Foodland, FreshCo and Safeway, stated it might enhance its dividend by 1.5 cents to 16.5 cents, a ten p.c enhance. The corporate stated it additionally plans to purchase again $ 350 million in shares subsequent fiscal yr.

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