Empire Co. Ltd. beats on earnings as it pushes for cost savings, streamlining

STELLARTON, N.S. — Empire Co. Ltd. says it has largely completed major structural changes as part of a turnaround plan but it is already looking to the next phase for the company.

The parent company of the Safeway and Sobeys grocery chains says it achieved $200 million in benefits in fiscal 2019 and expects another $250 million in benefits in the final year of the three year program it called Project Sunrise.

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The company plans to outline its next round of goals sometime in the spring to keep momentum going forward, said company CEO Michael Medline on a conference call Thursday.

"We're going to have very aggressive goals to grow our year-over-year earnings numbers as we go forward. I don't want anyone to think we're going to take a holiday after [project] sunrise."

The company instituted the turnaround plan after it had struggled following the takeover of Safeway in 2013. It expects to achieve cumulative benefits of $550 million from the program.

Empire, which also added Farm Boy to its roster of companies in an $800 million deal last year, is ready to move on to new initiatives now that the corporate structure and stores are working well, said Medline.

"When we pull the rope, it works."

For the first quarter it earned a profit of $130.6 million, up from $95.6 million in the same quarter last year.

On an adjusted basis, Empire says it earned $133.9 million, or 49 cents per share for the quarter, up from $100.2 million, or 37 cents a year ago.

Sales totalled $6.74 billion, up from $6.46 billion, while same-store sales excluding fuel increased 2.4 per cent.

Analysts on average had expected a profit of 48 cents per share and revenue of $6.82 billion, according to financial markets data firm Refinitiv.

RBC Capital Markets analyst Irene Nattel said the company started the fiscal year on a "solid note," with consolidated results ahead of the company's forecast but largely in line with the consensus as it achieved lower operating costs.

Companies in this story: (TSX:EMP.A)

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