STELLARTON, N.S. — Empire Co. Ltd. is closing about 50 underperforming Sobeys stores to help improve its bottom line following a review of its operations in the wake of last summer’s $5.8-billion acquisition of Canada Safeway.
About 60 per cent of the affected grocery stores are in Western Canada, said Nova Scotia-based Empire, which owns the Sobeys chain.
The retailer took a $169.8-million restructuring charge in its latest quarter related to the store closures as it reported sharply lower earnings.
President and CEO Marc Poulin said the store closures will “strengthen the quality of our store network and is expected, along with other initiatives, to enhance overall performance and net earnings.”
The grocer said the move will shave about $400 million or about 1.9 per cent off its future annual sales.
Empire reported Thursday a fourth-quarter profit, net of non-controlling interest, of $800,000 or a penny per diluted share compared with $105.9 million or $1.56 per diluted share a year ago. Consolidated sales for the quarter ended May 3 were $5.94 billion, up from $4.26 billion a year ago, boosted by the acquisition of Canada Safeway last summer.
Sobeys’ same-store sales were up 0.2 per cent from the prior year.
On an adjusted basis, the company reported a profit from continuing operations of $131.3 million, or $1.42 per diluted share, compared with $95.7 million, or $1.40 per diluted share, in the same quarter of last year.
Those results beat analysts’ expectations of adjusted net income of $112.2 million and adjusted earnings per share of $1.29, according to estimates compiled by Thomson Reuters.
Empire (TSX:EMP.A) also increased its quarterly dividend by a penny to 27 cents per share.
During the quarter, sales from the food retailing segment increased $1.68 billion or 39.5 per cent. Excluding sales of $1.59 billion related to the acquisition of Canada Safeway, sales from the food retailing segment increased by $94.4 million or 2.2 per cent.
For its full financial year, Empire said it earned $235.4 million or $2.93 per diluted share, net of non-controlling interest. That was down from $379.5 million or $5.58 per diluted share the previous year.
Adjusted net earnings for the full year were $383.1 million, or $4.78 per diluted share, compared with $356.8 million, or $5.24 per share, in 2013.
Consolidated sales for its 2014 financial year were $20.99 billion compared with $17.4 billion in fiscal 2013, helped by the acquisition of Canada Safeway.
During this period, sales from the food retailing segment increased $3.6 billion or 20.7 per cent. Excluding sales of $3.20 billion related to the acquisition of Canada Safeway, sales contribution from the food retailing segment increased by $394.1 million or 2.3 per cent.