One of Canada’s biggest grocery chains is feeling the pain from its $6-billion expansion in Western Canada. The parent company of Sobeys is taking almost $2 billion in impairment charges as it struggles with the Safeway stores it bought in 2013.

The loss was largely due to a recognition that the long-term value of the Safeway business is lower than previously estimated.

Excluding that writedown and certain other items, Empire Co. would have had $82.5-million of adjusted earnings in its fiscal third quarter – down 36.1 per cent from $118.6-million.

The net loss amounted to $5.03 per share, which included a $1.59-billion writedown of goodwill associated with the Safeway purchase. After adjustments, Empire earned 30 cents per share in the 13 weeks ended Jan. 30.

A year earlier, Empire’s fiscal third-quarter had $123.6-million of net income or 45 cents per share and $118.6-million of adjusted earnings, or 43 cents per share.

Revenue was up $86.7-million over the 13 weeks ended Jan. 30 to $6.03-billion from $5.94-billion in last year’s third quarter, mainly because of food inflation and the acquisiton of Co-op Atlantic.

“The challenges that we experienced in the first half of fiscal 2016 related to the integration of our Safeway business only intensified in the third quarter,” Empire president and CEO Marc Poulin said in a statement issued late Wednesday.

He said its Safeway banner and the West business unit saw sales eroded in a difficult economic environment, mainly in Alberta and Saskatchewan.

“Our focus is on rebuilding top-line sales in the West through initiatives such as our Better Produce at Lower Prices initiative introduced into the market at the end of the third quarter.”

- With files from BNN