FreshCo helps keep Empire’s Q1 sales growing

The company also says its private labels are surging, while ad spend will be consistent with, or lower than, last year.

Sobeys

Empire is boasting unprecedented performance at FreshCo performance.

The company, which operates around 1,600 stores under Sobeys, FreshCo, Farm Boy, IGA, Safeway and Foodland banners, is reporting a 4.4% rise in sales to $7.9 billion in the first fiscal quarter. Same-store sales growth, excluding fuel, was only 0.4%, though that’s compared to a decline of 2.2% in the same quarter last year and a decline of 2.4% in the fourth quarter of fiscal 2022. The grocer is also reporting higher transaction counts, with slightly smaller basket sizes.

Michael Medline, Empire’s president and CEO, said in an earnings call says there is better same-store sales momentum at its 2023 fiscal year begins.

“This was a very clean quarter,” Medline says, adding that the FreshCo banner is having its “best results in its history.” Empire’s private label portfolio is “on fire” as well, increasing sales 9.5% over year.

Profits at Empire, however, were $187.5 million, down a slight $1 million compared to last year. While the company says Project Horizon initiatives (including private labels, analytics and the expansion of FreshCo, Voilà and Farm Boy) had a positive impact on profitability, the investments also resulted in higher selling and administrative expenses.

Marketing spend in Q1 was also higher than it was last year, due to the timing of marketing spend with things like the Olympics at the quarter’s end. This year, marketing spend will be “broadly consistent, if not a bit lower, as we get into the second half of the year,” the company says.

Overall e-commerce industry sales were lower than anticipated as restrictions eased and lockdowns were lifted compared to the prior year. Empire says it expects that Voilà’s net earnings dilution for fiscal 2023 to be approximately the same as fiscal 2022, though it is “very confident in long-term trajectory” of ecomm.

Medline says the company is pleased with the recent expanding of its Scene+ loyalty program in Atlantic Canada, a “great start for a foundational element in our company’s success going forward.”

The new Scene+ will be entering Western Canadian markets – B.C., Alberta, Saskatchewan and Manitoba – on Sept. 22. Additional regional launches will continue across the country for the remainder of 2022 and into early 2023.

Medline says it’s pleased with early Scene+ traction thus far. “It’s a great start, but we are in early innings,” Medline says. Scene+ has strong recognition and it is seeing lots of interest from potential new partners. Potential brand partners, he notes, will have to “strongly resonate with Canadian consumers.”