'We are not seeing inflation in our business,' Empire CEO says
Empire Co. Ltd. ‘s chief executive says he rejects the idea of elevated grocery price increases, saying inflation has remained stable for the company despite widespread reports of higher food prices .
Michael Medline said the grocer’s internal inflation for the quarter was “way under” Statistics Canada’s consumer price index (CPI) for food purchased from stores and significantly below its same-store sales.
The CPI data for April showed the annual pace of inflation had cooled, but Statistics Canada said Canadians are continuing to see the cost of groceries rise at a faster rate. The agency on May 20 said the cost of food purchased from stores increased 3.8 per cent on a year-over-year basis in April, up from 3.2 per cent in March.
“Let me be crystal clear: we are not seeing inflation in our business outside of historical norms, and Empire’s price inflation has remained very stable,” Medline told analysts during the company’s fourth-quarter earnings call on Thursday. “All to say, we are unable to reconcile what we are hearing or reading about inflation in the media — in food or for some in the industry — to what we are actually experiencing.”
For the quarter ending May 3, Empire reported a 16.1 per cent increase in profits to $173 million, compared to $149 million in the same quarter last year. Net earnings were 74 cents per share, up from 61 cents per share a year ago. On an adjusted basis, its recorded net earnings were $173 million, up 12.3 per cent from last year.
Empire’s food sales for the quarter increased by 3.8 per cent, which it said was driven by positive growth, particularly in its full-service and discount banners.
Gross profits increased 5.1 per cent, primarily driven by higher sales, strong performance in its full-service banners and expansion in the FreshCo, Farm Boy and Voilà banners.
The company had earnings before interest, taxes, depreciation, and amortization (EBITDA) of $599 million in the quarter — up from $557 million in the previous year. Adjusted EBITDA margin increased to 7.8 per cent from 7.6 per cent a year ago.
• Email: dpaglinawan@postmedia.com
Bookmark our website and support our journalism: Don’t miss the business news you need to know — add financialpost.com to your bookmarks and sign up for our newsletters here.