Empire Reports Fiscal 2024 Third Quarter Results

• Earnings per share (“EPS”) and adjusted EPS⁽¹⁾ of $0.54 and $0.62 respectively
• Prior year EPS of $0.49 and adjusted EPS of $0.64
• Same-store sales, excluding fuel, increased by 1.9%
• Gross margin, excluding fuel, increased by 87 basis points, partially due to impact of the Cybersecurity Event⁽²⁾ in the prior year
• Strong free cash flow generation of $349 million 
• Share buyback program on track; Repurchased $340 million of shares to date in fiscal 2024

STELLARTON, NS, March 14, 2024 /CNW/ – Empire Company Limited (“Empire” or the “Company”) (TSX: EMP.A) today announced its financial results for the quarter ended February 3, 2024. For the quarter, the Company recorded net earnings of $134.2 million ($0.54 per share) compared to $125.7 million ($0.49 per share) last year. For the quarter, the Company recorded adjusted net earnings of $153.1 million ($0.62 per share) compared to $164.8 million ($0.64 per share) last year.

“Our team delivered solid results, in line with our expectations, given a cautious consumer navigating the impacts of higher interest rates,” said Michael Medline, President & CEO, Empire. “We are a different Empire Company now, with the capabilities, processes, and disciplines in place to stay strong through tougher times as shown in our quarterly results. More than ever, we are focused on identifying novel ways to provide ongoing value to our customers, including through the recent launch of a new 11-week program that lowered or locked prices on approximately 1,000 items across many of our banners.”

COMPANY PRIORITIES

Over the last six years, the Company has successfully completed two transformation strategies, Project Sunrise and Project Horizon. These strategies have comprehensively reset Empire’s foundation, enhanced the Company’s data capabilities, deepened the understanding of customers, and prepared the business to effectively capture emerging trends. With these transformation strategies now accomplished and the turnaround complete, the Company aims to grow total adjusted EPS over the long-term through net earnings growth and share repurchases. The Company intends to continue improving sales, gross margin (excluding fuel) and adjusted EBITDA margin by focusing on priorities such as:

Continued Focus on Stores:

Over recent years, the Company has accelerated investments in renovations, conversions, and new stores along with store processes, communications, training, technology and tools. Investing in the store network will remain a priority, demonstrated by a sustained emphasis on renovations and continued store expansion in discount. The Own Brands program enhancement will remain a priority through increased distribution, shelf placement and product innovation.

The Company intends to invest capital in its store network and is planning to renovate approximately 20% to 25% of the network over the next three years. This capital investment includes important sustainability initiatives such as refrigeration system upgrades, heating, ventilation and air conditioning (“HVAC”) system upgrades and other energy efficiency initiatives.

Enhanced Focus on Digital and Data:

The focus on digital and data will include continued e-commerce expansion with Voilà, loyalty, through Scene+ (see “Business Updates – Voilà” and “Business Updates – Scene+” for more information), personalization, improved space productivity and the continued improvement of promotional optimization. Space productivity will further enhance the customer experience by improving store layouts, optimizing category and product adjacencies and tailoring product assortment for each store. The advanced analytics tools built for promotional optimization will continue to be refined through the partnership between the advanced analytics team and category merchants.

Efficiency and Cost Control:

The Company has significantly improved its efficiency and cost effectiveness through sourcing efficiencies, optimizing supply chain productivity and improving systems and processes. The Company will continue to focus on driving efficiency and cost effectiveness through initiatives related to sourcing of goods not for resale, supply chain productivity and the organizational structure.