Sobeys suffers from integrating Safeway business
Reports more than 14 per cent decline in first-quarter results
Empire Co. Ltd., parent company of Sobeys, has reported a more than 14 per cent decline in fiscal first-quarter net earnings, citing costs associated with the integration of its Safeway business.
Empire said earnings net of non-controlling interest were $108.8 million or $1.18 per share in the three-month period ended Aug. 1, down 14 per cent from $123.1 million or $1.33 per share in the comparable year-earlier period.
Adjusted net earnings were $121.7 million, down 5.7 per cent from $129.1 million.
Sales edged up $26.5 million or 0.4 per cent to $6.25 billion from $6.22 billion.
“Clearly there has been a significant amount of change in our Safeway business as we focus on the integration,” president an CEO Marc Poulin said in the company’s earnings report, issued after markets closed.
“Although we had identified the various risks associated with integration, including the amount and pace of change required, we underestimated the impact and the time needed for the organization to adapt to those changes,” he said.
Poulin added that management had identified the core issues and has allocated the necessary resources to “ensure we bring our performance back in line with our expectations in the coming quarters.”
Empire said the increase in sales was primarily the result of food inflation along with its acquisition of Co-op Atlantic and the associated long-term supply and franchise agreements.
That was partially offset by a number of factors, including store closures associated with network rationalization, lost wholesale food volumes resulting from the loss of wholesale customers, and the decline in oil prices and the economic downturn in areas hurt by the oil-price decline.
Empire, whose key businesses are food retailing and related real estate, has some $24 billion in annual sales and $11.6 billion in assets. Along with its subsidiaries, franchisees and affiliates, it employs about 125,000 people.