Empire, the parent company of Sobey’s, anticipates temporary fluctuations in sales due to inflation-driven consumer spending patterns. In response, the company intends to allocate its resources towards store renovations and expansion.
Short-term Sales Volatility
Empire acknowledges that same-store sales may experience short-term fluctuations, primarily because of the adverse impact caused by a cybersecurity attack in the previous year. Additionally, the continued effects of inflation on consumer behavior are expected to further weigh on sales.
Positive Sales Growth in the Fiscal Third Quarter
Despite these challenges, Empire has observed an improvement in same-store sales growth (excluding fuel) during the first five weeks of the fiscal third quarter, compared to the second quarter that concluded on November 4th.
Strong Business Fundamentals Amidst Uncertainty
Chief Executive Michael Medline emphasizes that although higher interest rates and economic uncertainty influence customer purchasing behaviors, the underlying fundamentals of Empire’s business remain robust.
Investment Plans for the Future
To support its growth strategy, Empire has set aside a capital spending budget of CAD 775 million (approx. USD 573.2 million). Over the next three years, the company aims to renovate around 25% of its network. Half of the allocated capital will be directed towards renovations and new store expansion. Moreover, approximately CAD 50 million will be invested in sustainability initiatives such as upgrading refrigeration and HVAC systems.
In conclusion, Empire acknowledges the short-term challenges posed by fluctuating sales trends influenced by inflation and previous cyber attacks. However, the company remains optimistic about its strong business fundamentals and has ambitious plans for renovations, expansions, and sustainability initiatives.
