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Sobeys to cut 800 office jobs as part of reorganization

Grocery store chain makes cuts in an effort to turn around its business

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The Sobeys grocery business will be cutting about 800 office jobs across Canada.

The layoffs are part of Project Sunrise, a three-year transformation launched by Empire president and CEO Michael Medline to simplify the organizational structure, reduce costs and move past the struggles it endured following the acquisition and integration of Safeway in 2013.

Empire owns and operates Sobeys, Safeway stores in western Canada and the FreshCo discount brand.

“The future success of Sobeys, and our continued service to over 900 communities across the country, depends on our steadfast commitment to transform our business,” said Medline, who was hired by the Stellarton, N.S.-based company earlier this year.

Medline has been working to turn the ailing business around and the company saw signs of improvement in its 2018 Q1 financial results released in September.

Sales rose to $6.27 billion in the quarter, from $6.18 billion a year ago. Profit was down slightly but adjusted earnings significantly beat analyst expectations. It also reported that Sobeys had achieved same-store sales growth. It was the first time in 18 months that Sobeys had reported higher year-over-year sales at stores open at least a year.

Sobeys is Canada’s second-largest grocery company, after Loblaw Companies Limited, and faces many of the same challenges in the industry: competition from new rivals, higher costs from rising minimum wages in some areas and technological change.

Amazon.com’s increased presence in food retailing — including its recent acquisition of the Whole Foods chain of grocery stores — is putting pressure on Canada’s major domestic grocers.

While Whole Foods has few stores in Canada, the country’s grocers have worked to improve their efficiency to defend themselves from Amazon’s move into a bricks-and-mortar business to complement its disruptive online presence.

Additionally, Sobeys and other national retailers have said they expect labour costs to rise as a result of higher minimum wages in Ontario — the country’s biggest provincial economy — as well as higher food costs.

The Competition Bureau is also investigating the grocery industry amid allegations of price-fixing in the packaged bread space. Loblaw, Sobeys and Metro have said they’re co-operating with the federal agency’s probe but details of the files have been sealed by court order, limiting their comments on the matter.

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