The idea of a “Grocery Code of Conduct” isn’t dying quietly in Canada, despite some new opposition to the concept from several grocers with a Canadian presence. Coming out in favor of the arrangement, meanwhile, is Canadian grocery giant Empire Co (TSE:EMP.A), who put some quiet support behind it. That wasn’t taken well by investors, who sent shares down fractionally in Tuesday morning’s trading.
Empire Co., via CEO Michael Medline, said there wasn’t any real evidence that a grocery code of conduct wouldn’t raise prices for Canadian consumers. If there were, Medline noted, he wouldn’t support such a code. That’s not what several other grocers had to say, including Loblaws (TSE:L) and Walmart (NYSE:WMT).
But Empire Co., which runs the Sobeys brand, took to the Retail Council of Canada to make clear that it doesn’t have a problem with the code as presented. With both Loblaws and Walmart in opposition to the code, reports suggest it may ultimately be made mandatory rather than voluntary to force them into the position.
Trouble Enough Already
For those who might think, perhaps a bit cynically, that, of course, a grocer would come out in favor of something like this if it meant better profits, it may be worth reconsidering. A report from Supermarket News detailed that Sobeys’ has been working frantically to put itself in a better light to the Canadian consumer, which has been doing decently well so far. While Canadian consumers stay extremely cautious, there are signs that Sobeys’ focus on pricing is giving it a leg up in the market. It’s a safe bet that Sobeys’ will want to take as few risks as possible on that front.
Is Empire Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on EMP.A stock based on three Buys and four Holds assigned in the past three months, as indicated by the graphic below. After a 7.55% loss in its share price over the past year, the average EMP.A price target of C$38.43 per share implies 17.02% upside potential.
