Empire Company Limited (TSX: EMP.A) announced on Thursday its financial results for the third quarter ended February 1, 2025. For the quarter, the company recorded net earnings of $146.1 million ($0.62 per share) compared to $134.2 million ($0.54 per share) last year. For the quarter, the company recorded adjusted net earnings of $146.1 million ($0.62 per share) compared to $153.1 million ($0.62 per share) last year.
“We are pleased to see our strong execution continue in Q3, highlighted by improving same-stores sales and our ongoing discipline in managing margins,” said Michael Medline, President & CEO, Empire.
Empire is a Canadian company headquartered in Stellarton, Nova Scotia. Empire’s key businesses are food retailing, through wholly-owned subsidiary Sobeys Inc., and related real estate. With approximately $31.1 billion in annual sales and $16.8 billion in assets, Empire and its subsidiaries, franchisees and affiliates employ approximately 128,000 people.
The company said it is continuing to enhance data capabilities and deepen the understanding of customers, allowing it to effectively capture emerging trends. It said it aims to grow total adjusted EPS over the long-term through net earnings growth and share repurchases.
“Over recent years, the Company has accelerated investments in renovations, conversions, and new stores along with store processes, communications, training, technology and tools. Investing in the store network will remain a priority, demonstrated by a sustained emphasis on renovations and continued new store expansion. The Own Brands program enhancement will remain a priority through increased distribution, shelf placement and product innovation,” Empire said in a news release.
“The Company intends to invest capital in its store network and is on track with its plan to renovate approximately 20% to 25% of the network between fiscal 2024 and fiscal 2026. This capital investment includes important sustainability initiatives such as refrigeration system upgrades and other energy efficiency initiatives.
“For fiscal 2025, capital spend is expected to be approximately $700 million, with approximately half of this investment allocated to renovations and new store expansion, 25% allocated to IT and business development projects and the remainder allocated to central kitchens, logistics, sustainability and e-commerce. The Company is on track with its plan to renovate approximately 20% to 25% of the network between fiscal 2024 and fiscal 2026.”
Regarding its financial results, Empire said food sales for the quarter increased by 3.1% primarily driven by positive growth across the business, particularly in Full-Service and FreshCo. Fuel sales for the quarter increased by 2.7% driven by higher fuel prices and higher volume compared to the prior year.
Gross profit for the quarter increased by 4.8%, primarily driven by higher sales, strong performance and operational discipline aimed at reducing shrink, and business expansion (Farm Boy, FreshCo and Voilà). Gross margin for the quarter increased to 27.0% from 26.5% in the prior year primarily as a result of disciplined execution and targeted efficiencies in our stores aimed at reducing shrink. Excluding the mix impact of fuel sales, gross margin for the quarter was 43 basis points higher than the prior year.
“Voilà, the Company’s online delivery business, has three active CFCs located in Toronto, Montreal and Calgary. In the fourth quarter of fiscal 2024, the Company decided to pause the opening of its fourth CFC in Vancouver, British Columbia to focus efforts on driving volume and performance in its three active CFCs. Construction of the external building for the fourth CFC has been substantially completed with the internal work related to the grid build and robot commissioning not yet started. Once e-commerce penetration rates in Canada increase, the Company will be in a position to make a decision quickly on when it will proceed with the opening of its fourth CFC,” said Empire.
“Since fiscal 2018, the Company has been expanding its FreshCo discount format to Western Canada and its significant growth has been driven by store conversions and regional expansion. The value proposition and strong multicultural assortment, along with the addition of the Scene+ loyalty program, has supported the growth and expansion of the discount format. As at March 12, 2025, FreshCo has 48 stores operating in Western Canada and the Company expects to achieve its original targeted growth of converting up to 25% of 255 Safeway and Sobeys Full-Service format stores in Western Canada over the next several years.
“Recent imposition of tariffs by the United States government and retaliatory tariffs by the Canadian government are expected to create volatility in the Canadian economy, including higher future costs for importing goods, potentially contributing to higher inflation if increased costs are passed to Canadian consumers. The timing and duration of increased tariffs create financial uncertainty for Canadian companies, and may lead to potential job losses, reduced economic activity, and weakening confidence in the future, and could disrupt supplier relationships and the supply chain, and this may increase the volatility in the Company’s operational results. Currently, approximately 12% of the Company’s annual sales are related to goods sourced from the United States. The Company continues to focus on reducing this percentage by promoting local and Canadian products or by seeking alternate sources of supply outside the United States.”
Founded in 1963, Empire Company Limited has grown into a major player in Canadian retail through a series of strategic acquisitions and investments. The company owns, affiliates, or franchises more than 1,500 stores across Canada, operating under various banners including Sobeys, Safeway, IGA, Foodland, Farm Boy, FreshCo, Thrifty Foods, and Lawtons Drug.
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