Sobeys’ parent suffers 70% profit plunge in Q2
The parent company of Sobeys and Safeway Canada is vowing to clamp down on costs after suffering a sharp plunge in second-quarter earnings.
Empire Company (EMPa.TO) announced late Wednesday its adjusted profit tumbled 70 per cent to $32.9 million, or 12 cents per share, in the second quarter. Revenue fell 2.1 per cent to $5.93 billion and sales at stores that have been open for more than a year dropped 2.6 per cent. Analysts, on average, expected Empire to earn 29 cents per share on almost $6 billion in sales.
"Today, our business results are unacceptable," Empire's interim CEO Francois Vimard, said Thursday in a call with analysts.
Vimard has been at the company's helm since Marc Poulin's July departure.
“Significant price investments failed to translate into same-store sales growth … [amid] the combination of ongoing integration challenges in Western Canada, increased competition, and accelerated customer shift to improved value,” wrote Raymond James Analyst Kenric Tyghe in a report to clients.
Empire has been dogged by problems integrating the Safeway stores it purchased in 2013. On the day that $5.8-billion takeover closed, then-CEO Paul Sobey heralded it as "a great day in the 106-year history of Sobeys." Poulin, his successor, was on the job for fewer than three years before he was ousted on July 8 in the wake of $2.9 billion in writedowns in the 2016 fiscal year.
In an attempt to improve performance, the company announced on Wednesday it has tapped consultants to help identify cost-saving opportunities over the next couple of months.
Vimard claimed that "no rock will be unturned" in its search for improvements.
"Clearly a very disappointing second quarter for fiscal 2017 reflecting the significant and ongoing challenges we have been experiencing in our business," interim CEO François Vimard said in a statement. "These challenges simply reinforce the need for a renewed focus on our business transformation efforts, as well as a significant expansion and acceleration of efforts to reduce costs and complexity throughout our organization."
- with files from The Canadian Press