STELLARTON, Nova Scotia -- Sobeys here said it plans to retain the Commisso's Food Markets banner "at this point, and for the foreseeable future" on the 15 supermarkets it agreed to acquire earlier this month in Southern Ontario.
Bill McEwan, president and chief executive officer of Sobeys, said the 15 stores do approximately $344 million (U.S.) in revenues, "and we intend to grow that business."
Most of the stores operate in the Niagara Peninsula, a region where Sobeys has only limited penetration, McEwan pointed out.
Sobeys disclosed plans earlier this month to pay just under $50 million (U.S.) to acquire Commisso's assets, which also include six cash-and-carry stores and a wholesale business and distribution center in the Greater Toronto area.
The acquisition, which is subject to federal regulatory approvals, is expected to close by the end of January, McEwan said. Besides adding the physical assets, McEwan said Sobeys was particularly happy to add Commisso's "fine people" to the Sobeys family.
He said Commisso's has been on Sobeys' "radar screen" as a potential acquisition for several years.
Asked if Sobeys is looking for other acquisition opportunities, McEwan replied, "We've always said we are willing, motivated and capable of acquiring any assets in this country that fit our programs and our strategies."
McEwan made his remarks in a conference call last week following release of Sobeys' financial results for the second quarter and first half ended Nov. 1.
Sales rose 4.9% to $2.1 billion for the 13-week quarter, and 4.8% to $4.2 billion for the half, with comparable-store sales climbing 1.2% during the quarter. McEwan said the first-half sales gains reflect Sobeys' more competitive position across Canada and its "accelerated investment to grow the business."
Net income fell 7.3% to $33 million for the quarter, and 8% to $65 million for the half, which the company said reflected several non-recurring items, including an after-tax charge of $5 million from the impact of the Ontario power failure in the first quarter; without those items, the company said net earnings would have been up 6.7% in the quarter.
Glenn Hynes, executive vice president and chief financial officer, said the Commisso's acquisition would have no impact on earnings this year, but would be accretive by 6 cents per share in fiscal 2005.
In other comments made during the conference call, McEwan said the conversion of 22 of 58 Garden Market IGA stores in Manitoba and Alberta to the Sobeys banner has resulted in same-store sales that are running 3% to 6% ahead of other stores in the region that have not yet been converted. The conversions involve a stronger fresh offering, the addition of more groceries and health and beauty care items, and more competitive pricing, McEwan said.
He also said the introduction of dollar store sections, called Loonie Toonies & More, at 12 Price Chopper stores in Ontario has been "a solid addition that enhances our offerings." Sobeys plans to install additional dollar sections, McEwan said.