STELLARTON, Nova Scotia — Newly acquired and newly renovated stores, as well as effective sales and merchandising initiatives, lifted sales at Sobeys by 4.8% during the second quarter that ended Nov. 3, Sobeys' parent company said.
The food division of Empire Cos. reported sales of $3.3 billion (U.S.), with around $101 million in new sales coming from its recent acquisitions of the British Columbia-based Thrifty Foods chain and from Quebec-based wholesaler ADL. The Sobeys division contributed operating income of $88.9 million, up 13.7% over year-ago levels.
Bill McEwan, chief executive officer of Sobeys, in a conference call said the company experienced deflationary pressures as promotional activity remained extremely high in Ontario and also spread to Western and Atlantic Canada.
“In spite of some persistent challenges and in spite of some rather radical competitive activity, we continue to make progress,” he said.
McEwan, who in the previous quarter described competitive activity as “irrational,” was asked by an analyst to expound upon choosing the word “radical” to describe pricing during this quarter.
“I would just call it unusual and unfamiliar,” he said. “And I don't really want to comment on other competitors, [but] it is very different from what we've seen in prior years. And it's quite deep in its nature, it's radical in its approach, and that's all I'm really prepared to say.”
He added that price competitiveness had continued into the holiday season.
Analysts say aggressive pricing by Loblaw as it attempts to rebuild its sales momentum, as well as a reaction to an expansion of supercenters in Canada by Wal-Mart, has created a difficult pricing environment for supermarkets. McEwan, however, said pricing activity wasn't in reaction to specific moves by any one competitor, but the result of operators adjusting their own plans within the competitive environment.