Empire Co Cl A Nv (($TSE:EMP.A)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Empire Co Cl A Nv’s recent earnings call showcased a positive sentiment towards the company’s core business growth and strategic priorities, despite facing challenges in adjusted EPS and increased SG&A expenses. The leadership expressed optimism about improving profitability in the e-commerce segment and leveraging past investments for future growth.
Core Business Growth
Empire’s core business demonstrated a significant improvement, with a 12.5% increase over the previous year, excluding other income and share of earnings from equity investments. The company reported a 2.5% growth in same-store sales and a 3.4% rise in food sales, indicating a robust performance in its primary operations.
Gross Margin Improvement
The company achieved a 14 basis point improvement in its gross margin, attributed to operational efficiencies and disciplined execution in stores. Notably, excluding the impact of higher wholesale distribution sales, the gross margin improvement would have exceeded 20 basis points, highlighting effective cost management strategies.
Strategic Investments
Empire is strategically focusing on capitalizing on past investments in stores, technology, and strategic projects. The aim is to unlock their full potential, which is expected to drive future growth and enhance the company’s competitive position in the market.
Expansion and Growth
The company is planning to expand its store footprint by opening new stores and leveraging its discount and full-service formats. This expansion strategy is designed to capture additional market share and strengthen Empire’s presence in the retail sector.
Adjusted EPS Decline
Empire reported an adjusted EPS of $0.69, which is $0.04 lower than the previous year. This decline is primarily due to reduced real estate-related earnings, reflecting challenges in this segment of the business.
SG&A Increase
The company’s SG&A expenses, excluding depreciation and amortization, increased by 4.6%. This rise was influenced by investments in stores, technology, and strategic projects, along with higher labor costs and one-time expenses related to a lockout and retirements.
E-commerce Challenges
Empire’s e-commerce segment, particularly the Voilà division, continues to face profitability challenges. In response, the company is making strategic adjustments, such as ending exclusivity with Ocado and partnering with Instacart and Uber Eats, to enhance its online retail operations.
Forward-Looking Guidance
During the earnings call, Empire’s leadership provided detailed guidance on the company’s financial performance and strategic priorities. The company plans to allocate approximately 50% of its fiscal 2026 capital expenditures of $850 million to store renovations and new store expansions. Empire also emphasized its focus on cost control, customer value, and leveraging investments to seize growth opportunities. Additionally, the wholesale business is expected to grow due to new contracts, and the company plans to expand its discount and full-service store formats across various regions.
In conclusion, Empire Co Cl A Nv’s earnings call reflected a positive outlook, with strong core business growth and strategic investments paving the way for future success. Despite challenges in adjusted EPS and e-commerce profitability, the company remains committed to expanding its market presence and enhancing operational efficiencies.