Food inflation boots Empire Q1 revenue
Grocery store inflation may have peaked in Canada as price increases from food manufacturers stabilize, the head of Empire Company Ltd. said Thursday.
"While it is too early to definitively say that inflation has peaked, we're seeing some encouraging signs including the fact that the number and rate of cost increases from our suppliers is decreasing," Michael Medline, president and CEO of Sobeys Inc. and its parent company Empire, said during a call with analysts.
"We started to become a little more confident on that about three or four weeks ago."
In July, Loblaw Companies Ltd. chairman and president Galen G. Weston said there were early signs of easing inflation as commodity and transport costs improved.
But he said supplier costs remained high — putting sustained pressure on retail prices.
However, with Sobeys seeing supplier costs stabilizing, shoppers may finally get some relief from relentless price hikes at the grocery store.
Still, inflation is expected to continue shaping shopping habits as consumers look to save money.
Empire is seeing some shoppers shift to discount grocery stores, Medline said.
"FreshCo is performing very well and putting up the best results in its history," he said.
The grocery retailer's full-service stores are also performing well as the company's private-label brands and promotions attract value-seeking customers, Medline said.
"Our own-brands portfolio is on fire and delivering immense value to customers," he said, adding that sales of the grocer's in-house brands, such as Compliments, increased 9.5 per cent year-over-year in its most recent quarter.
Empire reported a first-quarter profit of $187.5 million as its sales rose 4.1 per cent compared with a year ago.
It's profit amounted to 71 cents per diluted share for the quarter ended Aug. 6.
The result compared with a profit of $188.5 million or 70 cents per diluted share a year ago when it had more shares outstanding.
Sales totalled $7.94 billion, up from $7.63 billion in the same quarter last year.
Empire said the growth in sales was driven by increased fuel sales, higher food inflation and the benefits from recent initiatives, including the expansion of its FreshCo banner in Western Canada, partially offset by the impact of pandemic restrictions being in place for part of the first quarter of the prior year.
Same-store sales for the quarter rose 3.3 per cent, while same-store sales, excluding fuel, gained 0.4 per cent.