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Sobeys Sales, Earnings Rise in Q4

STELLARTON, Nova Scotia — Sobeys posted a sales gain of 5.8% — 2.4% excluding acquisitions — and a 0.6% same-store sales gain in the fiscal fourth quarter, parent company Empire Cos. said Thursday.


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Sobeys accounts for nearly all of Empire’s financial results. The parent company reported quarterly net earnings of $ 102.5 million (U.S.) on sales of $ 4.1 billion. Net earnings increased 16.6% from the same period last year, and sales were up by 5.8%. For the fiscal year, food retail sales increased 8.4% to $ 16.8 billion.

Sales were impacted by the acquisition of 236 gas stations and convenience stores accounting for around $ 1 billion in sales during the year. Excluding those stores, Sobeys sales improved by 2.8% for the fiscal year.

In addition, Empire Cos. on Thursday said it reached agreements to sell its movie theater operations in two separate transactions, saying the deals would allow the company to focus attention on Sobeys and its real estate holdings.

More news: Analysts Watching Sobeys’ ‘Magical’ Safeway Deal

Empire said Cineplex Inc. would acquire 24 theaters in Atlantic Canada and two in Ontario for $ 200 million in cash. In a separate deal, Empire said it would sell 20 theaters in Ontario and Western Canada to Landmark Cinemas for around $ 55 million. Empire said it would retain a stake in the Landmark properties, although Landmark would manage the business and have the right to buy Empire’s stake for $ 19 million.

“The decision to sell the business of Empire Theaters was a difficult one as it had a long history in our company and is a great business with excellent employees who have worked hard over many years to build an attractive entertainment division,” Paul Sobey, chairman of Empire, said in a statement. “The decision, however, aligns with the strategic direction of the company to focus our resources on our food retail business … and on our real estate.”

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Inflation, acquisitions boost Sobeys Q2

The addition of Safeway Canada stores, along with food price inflation, helped Sobeys post a sales gain of 35.8% in the fiscal second quarter, parent company Empire Cos. said Friday.

Same store sales for the period, ended Nov. 1 were 1.7%. Earnings, totaling $ 101.3 million (U.S.) were up 93.2% as compared to the same period a year ago to and up by 53.7% when adjusted for one-time events. Sales totaled $ 5.2 billion (U.S.).


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Marc Poulin, president and CEO of Empire, in a statement said the company was pleased with the quarterly results and company performance year-to-date, adding that synergy savings and integration of the Safeway Canada acquisition were on track.

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Safeway Canada boosts Sobeys Q1 profits

The addition of Safeway Canada stores provided Sobeys with a 35.4% boost in sales and even higher gains in profitability during the fiscal first quarter, according to Sobeys parent company Empire Cos., which reported financial results Thursday.

For the 13-week quarter, which ended Aug. 2, Sobeys reported sales of $ 5.6 billion (U.S.), with comparable-store sales increasing by 1.3%. Gross margin as a percent of sales improved by 2.25% to 24.8%, and net earnings attributable to Sobeys were up by 43.3% to $ 103 million (U.S.).


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Sobeys said the addition of Safeway Canada stores, acquired a year ago, contributed to improved margins and profitability. Sales and merchandising activities at Sobeys, built around its “better food for all” culture, also contributed to the positive results, Marc Poulin, president and CEO of Empire, added.



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Safeway Canada boosts Sobeys Q1 profits

The addition of Safeway Canada stores provided Sobeys with a 35.4% boost in sales and even higher gains in profitability during the fiscal first quarter, according to Sobeys parent company Empire Cos., which reported financial results Thursday.

For the 13-week quarter, which ended Aug. 2, Sobeys reported sales of $ 5.6 billion (U.S.), with comparable-store sales increasing by 1.3%. Gross margin as a percent of sales improved by 2.25% to 24.8%, and net earnings attributable to Sobeys were up by 43.3% to $ 103 million (U.S.).


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Sobeys said the addition of Safeway Canada stores, acquired a year ago, contributed to improved margins and profitability. Sales and merchandising activities at Sobeys, built around its “better food for all” culture, also contributed to the positive results, Marc Poulin, president and CEO of Empire, added.



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Safeway Canada boosts Sobeys Q1 profits

The addition of Safeway Canada stores provided Sobeys with a 35.4% boost in sales and even higher gains in profitability during the fiscal first quarter, according to Sobeys parent company Empire Cos., which reported financial results Thursday.

For the 13-week quarter, which ended Aug. 2, Sobeys reported sales of $ 5.6 billion (U.S.), with comparable-store sales increasing by 1.3%. Gross margin as a percent of sales improved by 2.25% to 24.8%, and net earnings attributable to Sobeys were up by 43.3% to $ 103 million (U.S.).


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Sobeys said the addition of Safeway Canada stores, acquired a year ago, contributed to improved margins and profitability. Sales and merchandising activities at Sobeys, built around its “better food for all” culture, also contributed to the positive results, Marc Poulin, president and CEO of Empire, added.



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Safeway Canada boosts Sobeys Q1 profits

The addition of Safeway Canada stores provided Sobeys with a 35.4% boost in sales and even higher gains in profitability during the fiscal first quarter, according to Sobeys parent company Empire Cos., which reported financial results Thursday.

For the 13-week quarter, which ended Aug. 2, Sobeys reported sales of $ 5.6 billion (U.S.), with comparable-store sales increasing by 1.3%. Gross margin as a percent of sales improved by 2.25% to 24.8%, and net earnings attributable to Sobeys were up by 43.3% to $ 103 million (U.S.).


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Follow @SN_News for updates throughout the day.


Sobeys said the addition of Safeway Canada stores, acquired a year ago, contributed to improved margins and profitability. Sales and merchandising activities at Sobeys, built around its “better food for all” culture, also contributed to the positive results, Marc Poulin, president and CEO of Empire, added.



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Safeway Canada boosts Sobeys Q1 profits

The addition of Safeway Canada stores provided Sobeys with a 35.4% boost in sales and even higher gains in profitability during the fiscal first quarter, according to Sobeys parent company Empire Cos., which reported financial results Thursday.

For the 13-week quarter, which ended Aug. 2, Sobeys reported sales of $ 5.6 billion (U.S.), with comparable-store sales increasing by 1.3%. Gross margin as a percent of sales improved by 2.25% to 24.8%, and net earnings attributable to Sobeys were up by 43.3% to $ 103 million (U.S.).


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Sobeys said the addition of Safeway Canada stores, acquired a year ago, contributed to improved margins and profitability. Sales and merchandising activities at Sobeys, built around its “better food for all” culture, also contributed to the positive results, Marc Poulin, president and CEO of Empire, added.



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Safeway Canada boosts Sobeys Q1 profits

The addition of Safeway Canada stores provided Sobeys with a 35.4% boost in sales and even higher gains in profitability during the fiscal first quarter, according to Sobeys parent company Empire Cos., which reported financial results Thursday.

For the 13-week quarter, which ended Aug. 2, Sobeys reported sales of $ 5.6 billion (U.S.), with comparable-store sales increasing by 1.3%. Gross margin as a percent of sales improved by 2.25% to 24.8%, and net earnings attributable to Sobeys were up by 43.3% to $ 103 million (U.S.).


CONNECT WITH SN ON TWITTER

Follow @SN_News for updates throughout the day.


Sobeys said the addition of Safeway Canada stores, acquired a year ago, contributed to improved margins and profitability. Sales and merchandising activities at Sobeys, built around its “better food for all” culture, also contributed to the positive results, Marc Poulin, president and CEO of Empire, added.



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Safeway Canada boosts Sobeys Q1 profits

The addition of Safeway Canada stores provided Sobeys with a 35.4% boost in sales and even higher gains in profitability during the fiscal first quarter, according to Sobeys parent company Empire Cos., which reported financial results Thursday.

For the 13-week quarter, which ended Aug. 2, Sobeys reported sales of $ 5.6 billion (U.S.), with comparable-store sales increasing by 1.3%. Gross margin as a percent of sales improved by 2.25% to 24.8%, and net earnings attributable to Sobeys were up by 43.3% to $ 103 million (U.S.).


CONNECT WITH SN ON TWITTER

Follow @SN_News for updates throughout the day.


Sobeys said the addition of Safeway Canada stores, acquired a year ago, contributed to improved margins and profitability. Sales and merchandising activities at Sobeys, built around its “better food for all” culture, also contributed to the positive results, Marc Poulin, president and CEO of Empire, added.



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Analysts Watching Sobeys’ ‘Magical’ Safeway Deal

STELLARTON, Nova Scotia — Analysts in Canada last week were still waiting for another shoe to drop in the wake of Empire Cos.’ sweeping announcement that it would acquire Safeway Canada. The $ 5.8 billion deal, announced earlier this month and expected to close this fall, could signal the beginning of a new round of food retail consolidation in Canada, some analysts said. Others thought the deal itself might still draw a challenging offer from competitors Loblaw and/or Metro …

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Sobeys closures will encompass several banners

The 50 stores Sobeys plans to close include units acquired from Safeway as well as locations that carry some of the chain’s existing banners, the company told investors Thursday.

“It’s not only Safeway and Sobeys,” Marc Poulin, president and CEO of Sobeys, said during a fourth-quarter earnings call.

Stores being closed also operate under the IGA, Cash and Carry and Foodland banners, he noted. All 50 are under-performing, including at least 15 that are fairly small — in the range of 20,000 square feet or less — Poulin said.

Thirty of the 50 stores are in Western Canada, he pointed out, where Sobeys acquired 213 Safeways in mid-2013.

The closures are designed to have a positive impact on same-store sales at nearby Sobeys and Safeways, he added. Asked about realigning banners in Western Canada, Poulin said,


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“Clearly the first priority and the one we’re focusing on right now is the integration of the systems. Until that milestone is achieved, we will not work on integrating the commercial offer of the two programs we’re running out West.

“But that’s when the appropriate decision-making around our banner strategy will occur.”

The decision to close the 50 stores followed an assessment of all assets, Poulin said. “We thought it made sense to re-look at our business across Canada, market-by-market, [to determine] which assets were performing and which were not performing to expectations,” he explained.

“We looked strategically at what needed to be done to achieve our long-term [goals], so what you’re seeing is the conclusion on stores that have been consistently underperforming versus expectations and that we determined would not fit in the long-term desired outcome in terms of strategy.”

“We really looked at every single one of the assets we owned or had a lease on,” Francois Vimard, CEO of Empire, Sobeys parent company, added.

According to Poulin, the assessment involved “a question of focus for the operation. Retail stores that are underperforming require an awful lot of management attention, and for a store that doesn’t have a future, management attention was not being put to its proper use. Closing those stores will allow us to focus attention on stores with more potential.”

The strategic assessment also impacted Sobeys’ real estate plans, Poulin added, “since after an acquisition such as Safeway, we had to design a totally new and different real estate strategy because there are stores that we acquired that obviously fitted very well in our overall portfolio and therefore we will not have to seek new locations in those markets.”

Asked about business at the acquired Safeway stores, Poulin said the trend has been fairly stable during the last six months. “Business came to us with a little bit less momentum than we would have liked, and our team has been putting together plans to reverse that trend,” including new pricing “to improve the perception of the value we offer customers,” he explained.

The early results are positive, he noted.

Vimard told investors it will be more difficult in the future to discuss Safeway as a separate entity, “because starting in the first quarter their numbers will be integrated with our numbers, so that’s not something we’re going to disclose separately going forward.”

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Sobeys, Fresh & Easy market specialty burgers

With yesterday’s holiday marking the unofficial kick-off to summer, grilling is on the minds of many consumers. At the same time, this year’s record-high beef prices may push more customers to switch to ground beef or other ground meats.

Several retailers have used social media to promote more sophisticated burgers, whether value-added options sold in stores or recipes for consumers to try at home.

As part of its partnership with celebrity chef Jamie Oliver, Sobeys launched a better burger social media contest and features value-added products created by the chef.

Food Lion posted a video for a turkey burger recipe using ingredients from the retailer and a local specialty store.

Fresh & Easy showcases another meat trend: bacon.

Heinen’s highlights its specialty beef, chicken, turkey and veggie burgers.

Stew Leonard’s features a “burger of the week” at its in-store eatery.

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Sobeys to challenge provincial ban on pharmacy rewards

Sobeys said it would launch a legal challenge to a resolution by pharmacists in Alberta that would prevent patients from collecting reward points for pharmacy purchases.

The Alberta College of Pharmacists, a group that develops and enforces pharmacy practices in the province, voted last week to prohibit its members from “offering, providing or being party to offering or providing an inducement to a patient where the inducement is offered or provided on the condition that the patient obtains a drug product or a professional service from the regulated member or the licensed pharmacy.” The resolution is to take effect May 1.


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“We strongly disagree with the College’s decision,” Sandra Aylward, VP, professional and regulatory affairs for Sobeys, said in a statement. “Studies show that loyalty programs build stronger bonds between patients and their pharmacies, and encourage better patient adherence to prescription medication, which is in the best interests of patient health care.”

Millions of Albertans earn loyalty rewards and choose to use them to enrich their lives, buy products and travel, Sobeys said. According to a survey conducted in 2012 by Research Now, 73% of Albertans believe a ban such as this to be unfair. Sobeys said it was also encouraging Albertans who object to the ban to contact legislators to express their concerns.

In a release explaining the decision, the ACP said: “We must make sure pharmacists and pharmacy technicians can work in an environment where the critical decisions they must make can be made objectively — without any real or perceived impediment. The adoption of these amendments is just one more step we’re taking to support such a professional environment.”

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Sobeys addresses merchandising at Safeway stores

Sobeys said it is not only working to integrate systems at the stores it acquired from Safeway last year but is also implementing merchandising programs to address concerns with sales in some categories.


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In response to a question from a financial analyst, Marc Poulin, president and CEO of Empire Co., Sobeys’ corporate parent, said same-store sales trends at the Safeway stores “were below what we would have liked,” though he was not more specific.

“But we’re taking advantage of the opportunities we have with direct merchandising programs to address our concerns in some categories, and we’re working on the overall picture — not just integrating the stores but also moving the business forward dynamically.”

Poulin spoke Thursday with analysts to discuss financial results for the third quarter and 39-week period that ended Feb. 1. The third quarter was the first full period that reflected operations from the acquisition of Safeway’s 233 Canadian stores, which boosted Empire’s sales by $ 1.5 billion (U.S.)

Third-quarter sales at Sobeys — which represent approximately 99% of Empire’s results — rose 40.4% to $ 5.4 billion (U.S.), with same-store sales down 0.2%; excluding the Safeway stores, Sobeys sales were up 2.7%. For the 39-week period Sobeys’ sales rose 14.6% to $ 13.6 billion, while same-store sales fell 0.2%.

Net income for Empire fell 73.7% to $ 400,000 for the third quarter and declined 39% to $ 212.2 million, with sales climbing 14.6% to $ 13.6 billion.

Poulin said Sobeys is on track to achieve the targeted synergies from the former Safeway stores. “We are working diligently to successfully integrate the business and are focused on securing operational efficiencies and reducing costs across the network. We remain confident in our ability to secure $ 200 million in annual run-rate cost synergies over a three-year period.”

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Sobeys names Keay EVP, finance

Sobeys said Tuesday it has named Clinton Keay EVP of finance, reporting to Francois Vimard, chief financial and administrative officer.


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Keay will oversee all financial areas at the Stellarton, Nova Scotia-based company, including controllership, treasury, tax management, investor relations, financial planning internal audit and risk management.

Keay joined Sobeys in 1989 and held several senior finance roles before being named SVP and CIO in 2002. As CIO he led all aspects in the development and execution of the company’s IT strategy.

“Clinton’s deep understanding of our business gained from his 25 years in both finance and information technology leadership positions makes him uniquely qualified to assume this leadership role,” said Vimard in a statement.

Vimard had been named interim CFO following the departure of Paul Jewer earlier this month.

Sobeys, a wholely owned subsidiary of Empire Co., owns or franchises about 1,500 stores across Canada.

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Sobeys sells 30 stores in Western Canada

Sobeys on Thursday said it has agreed to sell 30 stores in Western Canada to three different retailers for about $ 392 million (U.S.).

The 30-store total is seven more than Sobeys had agreed to divest to meet Competition Bureau requirements related to its acquisition last year of Safeway Canada.

Read more: Sobeys completes Safeway acquisition


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The stores include 15 locations in British Columbia and Alberta being sold to Vancouver, B.C.-based Overwaitea Group; 14 in Saskatechwan, Manitoba and Alberta to Federated Co-operatives Ltd. on behalf of the Co-operative Retailing System; and one Price Chopper store to an unidentified buyer. In addition to the one Price Chopper, 25 of the stores are Safeways, three are Thrifty Foods and one is an IGA.

The annual sales from these stores total about $ 630 million, with EBITDA of $ 54 million.

Sobeys said it agreed to include an additional seven stores in British Columbia in the package to be acquired by Overwaitea in order to meet the requirements of both companies.

Read more: Sobeys must divest 23 stores

Both the Overwaitea and Co-op agreements have received approval from the Competition Bureau, and Sobeys said it anticipates the deals will close in March or early April. The sale of the Price Chopper location remains subject to finalization of an asset purchase agreement with the purchaser and approval from the Competition Bureau.

Sobeys, which is owned by Stellarton, Nova Scotia-based Empire Cos., said it would use the proceeds from the sales to pay down debt.

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Sobeys to Buy Safeway Canada for $5.8 Billion

TGF-FruitImageSTELLARTON, Nova Scotia — Empire Cos., parent of the Sobeys chain here, said Wednesday it would buy Safeway Canada for $ 5.8 billion (Canadian).

The acquisition of 213 stores would provide Sobeys with a leading position in Western Canada and grow Sobeys overall sales to around $ 24 billion. Safeway Canada, a division of Pleasanton, Calif.-based Safeway, had sales of around $ 6.7 billion and a profit of $ 428 million (Canadian) in the 12 months that ended March 23.

Safeway said proceeds from the transaction are expected to be used to pay down around $ 2 billion of debt, with the majority of the remainder to be used to buy back stock. In addition, some of the proceeds may be used to invest in growth opportunities.

Robert Edwards, Safeway’s new chief executive officer, in a statement Wednesday said the deal allowed Safeway to take advantage of high multiples for Canadian retailers.

“The substantial cash proceeds from this transaction will allow us to create value for Safeway stakeholders and contribute to the growth of the ongoing business,” he said.

Sobeys said it intended to pay for the transaction using a combination of a $ 1.5 billion Empire stock offering; around $ 1 billion through the sale and leaseback of the acquired facilities; a term loan of $ 1.825 billion, and the issuance of $ 800 million in new Sobeys debt.

The transaction has been approved by the boards of directors of both companies and is expected to close in the fall. The transaction is subject to customary closing conditions, including regulatory approval in Canada.

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Sobeys Must Divest 23 Stores: Regulators

OTTAWA, Ontario — Sobeys must sell 23 stores to remedy competition issues related to its acquisition of Safeway Canada, Canada’s Competition Bureau here said Tuesday.


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Sobeys, Stellarton, Nova Scotia, said it was seeking to sell 10 Sobeys stores and 13 Safeway units as part of the agreement. The divestitures would clear the final hurdle hurdle to the $ 5.8 billion deal for Safeway’s 233 stores in Canada, announced by Sobeys and Pleasanton, Calif.-based Safeway in June.

Stores to be divested are located in the provinces of Alberta, British Columbia, Saskatchewan and Manitoba, and include five in Winnipeg and four in Edmonton.

Read more: Sobeys Sale-Leaseback Funds Safeway Buy

“I am confident this agreement will ensure that Canadian consumers continue to benefit from competitive prices for a wide selection of grocery products,” John Pecman, commissioner of competition, said in a statement. “I commend the parties for their stellar cooperation with the Bureau throughout our review of the proposed transaction.”

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Safeway Buy Parallels Sobeys Health Effort

STELLARTON, Nova Scotia — As Sobeys embarks on a major strategic initiative that emphasizes food-focused, fresh-driven offerings, the pending acquisition of Safeway will coincide nicely with that effort, Marc Poulin, president and chief executive officer, told analysts.

Speaking during a conference call to discuss financial results for its corporate parent, Empire Cos., for the fiscal first quarter, Poulin said, “The initiative involving the Sobeys banner obviously predated the acquisition of Safeway, but we made the acquisition knowing very well where we see our future with a food-service format, and we felt this acquisition was obviously very much in line with the future we see for our stores — an evolution of the Sobeys brand that will encourage Canadians to eat better, feel better and do better.


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“So this acquisition makes so much strategic sense — not just for the great assets, great locations and very good management team, but also in terms of a very good alignment of the cultures of both companies.”

Poulin said Sobeys expects to integrate the existing management team at Safeway Canada with its own management. “That remains a work in progress, but i can say the talent at Safeway Canada is very welcome into the Sobeys team.”

Sobeys announced in June it would pay approximately $ 5.6 billion (U.S.) to acquire Safeway’s 213 Canadian stores, which had sales of $ 6.5 billion (U.S.) for the 12 months ended March 23. The transaction is scheduled to be completed during the fall.

Poulin reiterated that Sobeys expects to derive nearly $ 200 million in synergies from the deal, with about half coming during the first year after the acquisition and the balance in the second year.

For the quarter, which ended Aug. 3, net income for the parent company fell 42.6% to $ 63 million (U.S.), and adjusted net earnings on continuing operations declined 25.5% to $ 80.1 million. Overall sales rose 2.2% to $ 4.6 billion, and sales in the food-retailing segment also rose 2.2% — to $ 4.5 billion — while same-store sales fell 0.1%, which the company said was due to low inflation and increased competitive intensity.

Poulin said comps were weaker early in the quarter but finished stronger.

Paul D. Sobey, president and chief executive officer of Empire, said earnings performance in the quarter was below expectations, reflecting a highly competitive and promotional food retail operating environment and the discontinued operations of Empire Theatres, plus expenses associated with the Safeway acquisition.

Read more: Sobeys to Buy Safeway Canada for $ 5.8 Billion

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Safeway Buy Parallels Sobeys Health Effort

STELLARTON, Nova Scotia — As Sobeys embarks on a major strategic initiative that emphasizes food-focused, fresh-driven offerings, the pending acquisition of Safeway will coincide nicely with that effort, Marc Poulin, president and chief executive officer, told analysts.

Speaking during a conference call to discuss financial results for its corporate parent, Empire Cos., for the fiscal first quarter, Poulin said, “The initiative involving the Sobeys banner obviously predated the acquisition of Safeway, but we made the acquisition knowing very well where we see our future with a food-service format, and we felt this acquisition was obviously very much in line with the future we see for our stores — an evolution of the Sobeys brand that will encourage Canadians to eat better, feel better and do better.


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“So this acquisition makes so much strategic sense — not just for the great assets, great locations and very good management team, but also in terms of a very good alignment of the cultures of both companies.”

Poulin said Sobeys expects to integrate the existing management team at Safeway Canada with its own management. “That remains a work in progress, but i can say the talent at Safeway Canada is very welcome into the Sobeys team.”

Sobeys announced in June it would pay approximately $ 5.6 billion (U.S.) to acquire Safeway’s 213 Canadian stores, which had sales of $ 6.5 billion (U.S.) for the 12 months ended March 23. The transaction is scheduled to be completed during the fall.

Poulin reiterated that Sobeys expects to derive nearly $ 200 million in synergies from the deal, with about half coming during the first year after the acquisition and the balance in the second year.

For the quarter, which ended Aug. 3, net income for the parent company fell 42.6% to $ 63 million (U.S.), and adjusted net earnings on continuing operations declined 25.5% to $ 80.1 million. Overall sales rose 2.2% to $ 4.6 billion, and sales in the food-retailing segment also rose 2.2% — to $ 4.5 billion — while same-store sales fell 0.1%, which the company said was due to low inflation and increased competitive intensity.

Poulin said comps were weaker early in the quarter but finished stronger.

Paul D. Sobey, president and chief executive officer of Empire, said earnings performance in the quarter was below expectations, reflecting a highly competitive and promotional food retail operating environment and the discontinued operations of Empire Theatres, plus expenses associated with the Safeway acquisition.

Read more: Sobeys to Buy Safeway Canada for $ 5.8 Billion

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