Empire can win back Safeway customers, says CEO

TORONTO — Supermarket owner Empire Co. Ltd. has a lot of work to do before it can regain customer loyalty lost due to mistakes made after its purchase of Safeway Canada, its new chief executive said on Wednesday.

Focus groups suggest “we really did let them down” but there’s still loyalty to Safeway in the West that can be recaptured, Michael Medline told analysts. It was his first conference call since becoming the head of Canada’s second-largest grocery chain, which also owns Sobeys.

“You’ve got to be priced right and that’s pretty basic. But I think we strayed away about talking about our overall value proposition,” Medline said.

“Canadians should shop (with) us for a variety of reasons … and we got focused on talking only about price.”

The former Canadian Tire executive said investors would likely only see incremental improvements in the company’s fiscal fourth quarter.

Empire (TSX:EMP.A) reported a modest profit on Wednesday after recovering from a huge loss in last year’s third quarter, when its previous CEO oversaw a writedown involving its businesses in Western Canada.

Excluding the writedowns, Empire’s earnings in this year’s third quarter fell by 58 per cent to $34.6 million. Its revenue dropped by $137.4 million to $5.89 billion.

Medline said that company management has made progress on getting product pricing right and stabilizing the profit margins.

But it needs to cut out costs further to improve margins and make the organization easier to manage, he said, without disclosing exactly how those goals will be achieved. He did, however, point to the company’s “highly regionalized” structure.

“I can tell you, every single day that goes by, I realize that the current regional structure we have is very, very difficult to get things done,” he said.

Based in Stellarton, N.S., Empire had $30.5 million of net income for the company’s fiscal third quarter ended Feb. 4, or 11 cents per share under generally accepted accounting principles.

Irene Nattel, who covers Canadian retailers for RBC Dominion Securities, said in a brief note that Empire’s third-quarter results were “no worse than expected” and that earnings per share were above her forecast of seven cents per share.

The stock closed up 4.7 per cent at $17.32 in Toronto.

But the grocer was also hit with a downgrade by debt ratings agency DBRS, which lowered it to BB (high) from BBB (low) and maintained its negative trend, suggesting it could be cut even further. DBRS said the change reflected Sobeys’ underperformance relative to its peers, resulting in lost market share.

A year earlier, Empire had a loss of $1.37 billion or $5.03 per share, mostly due to a writedown of the Safeway chain — which Sobeys purchased for $5.8 billion in cash in November 2013 .

Just Posted

Red Deer hospital expansion advances to square one

Planning for future needs gets $1-million over five years

Divergent views on budget expressed by Red Deer school boards

Red Deer’s two school board chairs have opposite views on the provincial… Continue reading

Buffalo Lake residents voice opposition to proposed RV Resort

County of Stettler holds contentious Public Hearing on Paradise Shores RV Resort

Budget good for RDC, not so much Red Deer businesses

College can apply for more tech spots, but minimum wage is still going up

WATCH: Hundreds come to Red Deer Rebels Fan Fest

The Red Deer Rebels met with legions of their of fans just… Continue reading

Excavator frees dolphins trapped by pack ice in Newfoundland harbour

HEARTS DELIGHT, N.L. — A pod of dolphins trapped by pack ice… Continue reading

Structure fire destroys home in Mirror

A house in Mirror is completely damaged due to an overnight structure… Continue reading

Trudeau warns senators not to thwart will of Canadians on marijuana bill

OTTAWA — Prime Minister Justin Trudeau is reminding senators that his government… Continue reading

Burgers outselling classic baguette sandwiches in France

PARIS — Forget the baguette. The French are going crazy for burgers.… Continue reading

Can Zuckerberg’s media blitz take the pressure off Facebook?

NEW YORK — In the wake of a privacy scandal involving a… Continue reading

Brace for more red ink, no good plan for balance in Alberta budget: opposition

EDMONTON — Opposition parties say Albertans should brace for a provincial budget… Continue reading

Police: Austin bomber’s motive still unknown, despite video

PFLUGERVILLE, Texas — A 25-minute cellphone video left behind by the bomber… Continue reading

Facebook crisis-management lesson: What not to do

NEW YORK — The crisis-management playbook is pretty simple: Get ahead of… Continue reading

Most Read

Five-day delivery plus unlimited digital access for $185 for 260 issues (must live in delivery area to qualify) Unlimited Digital Access 99 cents for the first four weeks and then only $15 per month Five-day delivery plus unlimited digital access for $15 a month