Q4 profits at grocery giant Empire fell, while Scene+ is resonating with shoppers.
The parent company of Sobeys and Safeway announced a hike in its dividend, reporting a profit of $148.9 million for the quarter ended May 4, down from a profit of $182.9 million a year earlier. Sales for the quarter totaled $7.4 billion, about the same as a year ago, while same-store sales increased 0.2%.
Selling and administrative expenses increased primarily as a result of continued investment in business expansion including Voilà, Farm Boy and FreshCo, as well as higher retail labour costs driven by wage rate increases, increased investments in the store network, tools, technology and projects to support the Company’s strategic initiatives.
The company says its focus on digital and data will include continued e-commerce growth with Voilà, personalization, loyalty through Scene+, improved space productivity and the continued improvement of promotional optimization.
In Thursday’s earnings call, Empire president and CEO Michael Medline says he’s pleased with how the team has executed against an “inhospitable backdrop.”Medline noted it is “turning the corner on consumer sentiment” with gross margins continuing to improve.
There was low consumer confidence in Q4, Medline said, thanks to heightened interest rates. Food inflation was “well below CPI,” while consumers remain “careful in their spending,” he added.
As the economy improves, the company expects that customers will grow their baskets and trade up, translating into increased sales momentum.
Medline says the company remains “very optimistic about our Voilà business today as reflected in its strong Q4 same-store sales growth of 17.3%, and are confident and committed in its future success.” He adds that Voilà is the “best grocery ecommerce solution in Canada,” and “well placed to win this growing channel.” But the current size of the ecommunications market is smaller than the company had anticipated, Medline concedes.
Therefore, its Vancouver CFC opening has been “paused” as a result, as it focuses on other fulfillment centres.
On the loyalty side, Scene+ benefits are resonating with customers, Medline notes. Since launching, $270 million in points have been redeemed through the loyalty program. The program’s performance meeting and exceeding KPIs, he says.
Scene+ awareness and satisfaction “growing nicely” as it has 15 million members, which Medline calls “fantastic.” Empire remains focused on digital to grow the program.