Empire to expand FreshCo grocery chain in Western Canada amid restructuring woes

Empire to expand FreshCo grocery chain in Western Canada amid restructuring woes

Shares of Empire Co. Ltd. were down six per cent on Wednesday amid news it’s planning to convert up to a quarter of stores in Western Canada to its discount FreshCo banner as it struggles with industry challenges and increased labour costs.

The company made the announcement after it posted a loss in its latest quarter as it was hit by restructuring costs, and said it would incur increased labour costs starting at the end of the third quarter of fiscal 2018 as a result of minimum wage increases in some parts of the country.

CEO Michael Medline said the company’s decision to convert some of its 255 Sobeys and Safeway stores provides an “attractive strategic and financial opportunity for us” to grow market share in the Western provinces in a profitable way.

“Our comprehensive research and analysis shows that the West is fertile ground for ‘small box’ discount.”

Empire said it lost $23.6 million or nine cents per share for the 13 weeks ended Nov. 4 compared with a profit of $33.1 million or 12 cents per share a year ago. Sales in what was the company’s second quarter of its 2018 financial year grew to $6.03 billion, up from $5.93 million.

On an adjusted basis, Empire said it earned $73.9 million or 27 cents per share, up from an adjusted profit of $32.9 million or 12 cents per share in the same quarter last year.

Last month, Empire announced plans to cut about 800 office jobs as part of its plan to improve its operations amid rising challenges in the grocery industry including new rivals, technological change and rising minimum wages.

The company warned during its quarterly results that it may not be able to fully offset the impact of minimum wage increases in Ontario and Alberta that will cost up to $25 million in its 2018 financial year and $70 million in its 2019 financial year.

“We continue to work on further plans to mitigate the full year impacts for fiscal 2019, but there is some risk that we may not be able to fully offset the effects on earnings, considering the short transition period of the cost increases,” chief financial officer Michael Vels said during a conference call Wednesday.

Shares of Empire (TSX:EMP.A) were down $1.56, or 5.97 per cent, to $24.59 at the closing of markets Wednesday on the Toronto Stock Exchange.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Alberta Chief Medical Officer of Health Dr. Deena Hinshaw said on Thursday that the province reported the first case of the B.1.617 variant. (Photography by Chris Schwarz/Government of Alberta)
Red Deer nears record number of active COVID-19 cases

Alberta reports 1,857 new cases of COVID-19, 1,326 new variants

After considerable consultation with student representatives, Red Deer College has
made the difficult decision to increase tuition and fees for the 2021/2022 academic year. (Contributed photo)
Red Deer College to celebrate grads virtually in June

Graduates of Red Deer College won’t get an in-person graduation ceremony this… Continue reading

The Bowden Institution medium security facility is dealing with a COVID-19 outbreak. THE CANADIAN PRESS/Jeff McIntosh
Central Alberta Addiction centre faces COVID-19 outbreak

18 test positive at iRecover Treatment Centre in Tees

A cleaner goes into Red Deer’s Canada Post sorting facility near 67th Street and Taylor Drive on Thursday morning. Photo by PAUL COWLEY/Advocate staff
Employee tests positive for COVID-19 at Red Deer Canada Post mail sorting facility

Canada Post has confirmed an employee at the Red Deer mail processing… Continue reading

Two people (not in photo) are facing charges following a Sept. 20, 2020 anti-racism rally in Red Deer.
Advocate file photo
Woman charged in Red Deer anti-racism rally going to trial

Calgary woman facing a charge of assault with a weapon in connection with Sept. 20, 2020 rally

Curtis Labelle (second from left) and his band are planning a cross-Canada tour in 2022. Meanwhile, Labelle is continuing to host his weekly livestreamed talk show, Chattin 88. (Contributed photo).
Red Deer rock pianist takes on a talk show role

Curtis Labelle’s Chattin 88 gets views from around the globe

FILE - In this Friday, April 22, 2016 file photo, Argentine writer Mariana Enriquez poses for a portrait in Buenos Aires, Argentina. Books from Europe and Latin America that blur the boundaries of fiction, history and memoir are the final six contenders for the 50,000 pound ($69,000) International Booker Prize. On the shortlist is imaginative short-story collection “The Dangers of Smoking in Bed” by Argentina’s Mariana Enriquez. (AP Photo/Leandro Teysseire, File)
Inventive books make final 6 for International Booker Prize

Inventive books make final 6 for International Booker Prize

FILE - Japanese actress Miyoshi Umeki, accepts her Academy Award for best supporting actress for her role in "Sayonara," as presenter Anthony Quinn looks, during the Academy Awards ceremony in Los Angeles on March 26, 1958. Umeki was the first person from Japan to win an Oscar. (AP Photo)
Oscar slate holds “firsts” for Asian actors, filmmakers

Oscar slate holds “firsts” for Asian actors, filmmakers

SickKids surgeons give baby another shot at life after removing nearly 3-pound tumour

SickKids surgeons give baby another shot at life after removing nearly 3-pound tumour

A COVID-19 patient wearing oxygen mask waits inside a vehicle to be attended and admitted in a dedicated COVID-19 government hospital in Ahmedabad, India, Thursday, April 22, 2021. India reported a global record of more than 314,000 new infections Thursday as a grim coronavirus surge in the world's second-most populous country sends more and more sick people into a fragile health care system critically short of hospital beds and oxygen. THE CANADIAN PRESS/AP /Ajit Solanki
COVID-19 variant of interest vs. variant of concern: What does it mean?

COVID-19 variant of interest vs. variant of concern: What does it mean?

File photo
Expert says Saskatchewan should consider more targeted vaccine plan as variants surge

SASKATOON — Nazeem Muhajarine says he feels a sense of relief after… Continue reading

Canadian Prime Minister Justin Trudeau and United States President Joe Biden smile as they say farewell following a virtual joint statement in Ottawa, Tuesday, February 23, 2021. THE CANADIAN PRESS/Adrian Wyld
Trudeau pledges to cut emissions by 40% to 45% by 2030, short of U.S. goal

OTTAWA — Prime Minister Justin Trudeau is promising Canada will slash its… Continue reading

Finance Minister Chrystia Freeland holds a press conference in Ottawa on Tuesday, April 20, 2021. THE CANADIAN PRESS/Sean Kilpatrick
More supply needed to ease housing price crunch, but always more to do, Freeland says

OTTAWA — Finance Minister Chrystia Freeland says the country needs a boost… Continue reading

Smoke pours from the stacks at the Portlands Energy Centre in Toronto on Thursday January 15, 2009. THE CANADIAN PRESS/Frank Gunn
Risk experts say climate change to take big chunk of Canadian economy by 2050

One of the world’s largest insurers says Canadians will be more than… Continue reading

Most Read