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Sobeys_food_pharmacy_store_0_0.png Sobeys/Empire
Among other factors, an extra week in fiscal 2022 helped boost Sobeys' food retail sales by 13.3% in Q4 and 6.7% for the full year.

Sobeys gets lift from strategic initiatives despite mixed fiscal 2022 results

Expansion of store base, e-commerce network extends Canadian grocer’s reach

Sobeys Inc. parent Empire Company Ltd. posted increased net retail sales and flat same-store sales for its 2022 fourth quarter and fiscal year, with earnings per share falling short of analysts’ consensus estimate.

For the 14-week fourth quarter ended May 7, food retail sales totaled $7.84 billion (Canadian), up 13.3% from $6.92 billion in the 13-week fiscal 2021 quarter, Empire reported Wednesday. Same-store sales dipped 0.1% year over year and were down 2.5% excluding fuel, cycling COVID-boosted sales levels last year.

Michael_Medline_Sobeys_Empire_0_0_0.png"Improving our loyalty position is one of the final building blocks of the transformation journey we embarked on more than five years ago." — Michael Medline, Empire president & CEO (Photo courtesy of Empire)

The Stellarton, Nova Scotia-based food and drug retailer attributed the 2022 Q4 sales results mainly to the additional week of operations, its acquisition of Longo’s, higher fuel sales, elevated food inflation and benefits from its Project Horizon strategic plan, including the expansion of the FreshCo and Farm Boy banners in Western Canada and Ontario, respectively.

The 2022 fourth-quarter performance compared with decreases of 1.3% in food retail sales and 4.5% in same-store sales (-6.1% excluding fuel) in the 2021 quarter.

Full-year fiscal 2022 food retail sales came in at $30.16 billion, up 6.7% from $28.27 billion in fiscal 2021, when Empire recorded a 6.3% increase. Comparable-store sales in the 53-week period were flat but declined 2.1% excluding fuel, versus increases of 4.7% overall and 5.6% excluding fuel in the 52-week 2021 fiscal year. Empire said fiscal 2022 sales were lifted by the same factors that boosted Q4 results, partially partially offset by changes in consumer-buying behavior related to varying COVID-19 public health measures.

“Despite another quarter with a multitude of external pressures, particularly inflation rates we haven’t seen in decades, our teams have been busy executing with excellence,” Empire President and CEO Michael Medline said in a statement.

“At the same time, we have been busy preparing for fiscal 2023 and beyond, including unveiling our exciting new loyalty program. Improving our loyalty position is one of the final building blocks of the transformation journey we embarked on more than five years ago,” Medline explained, referring to Empire’s transition to the Scene+ program with partners Scotiabank and Cineplex, announced this month. Considering the inflationary period we are in, we will soon be giving our customers the opportunity to earn and redeem points for groceries through the Scene+ program, which is even more relevant. Offering our customers great value is a priority for us. We’re thrilled to have reached this significant milestone and cannot wait to introduce this game-changing loyalty solution to our customers in the near future.”

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Plans call for Sobeys to open four stores apiece in fiscal 2023 for its FreshCo and Farm Boy supermarket banners.

At the bottom line in the 2022 fourth quarter, Empire recorded net income of $178.5 million, or 68 cents per diluted share, compared with $171.9 million, or 64 cents per diluted share, a year ago. Analysts, on average, had forecast adjusted earnings per share of 70 cents, with estimates ranging from 65 cents to 75 cents, according to Refinitiv.

Full-year 2022 net earnings were $745.8 million, or $2.80 per diluted share, versus $701.5 million, or $2.60 per diluted share, in 2021. The consensus analysts projection was for adjusted EPS of $2.83 per diluted share, with estimates running from $2.78 to $2.88.

Empire noted that the ongoing expansion of the FreshCo discount grocery business in Western Canada has grown the banner to 40 stores, with the chain enlarging its footprint in the region by 40% in the fiscal 2022 second half.

In fiscal 2023, capital spending is pegged at about $800 million, with roughly half of those dollars earmarked for store remodels and new locations. Empire said. The Company expects to open four FreshCo stores in Alberta, four Farm Boy stores in Ontario and two Longo’s stores in Ontario. Currently, Farm Boy has 44 stores and Longo’s has 36 locations. Another 25% of capex funds will be allocated to advanced analytics technology and other technology systems.


Sobeys recently expanded its Voilà delivery service in Ontario and Quebec.

Empire also said it continues to see steady progress in expanding its Voilà online grocery delivery service and fulfillment network. In April, the grocer launched Voilà in the Ottawa area, about three weeks after rolling out Voilà par IGA home delivery in Quebec. Voilà delivery began in the metropolitan Toronto in June 2020 and is now available in Ontario, including the greater Toronto, Hamilton and Ottawa areas, and in Quebec, in the greater Montreal and Quebec City areas.

Voilà delivery is powered by automated customer fulfillment centers (CFCs) that Sobeys is developing under a partnership with United Kingdom-based Ocado Group. The first CFC opened in Vaughan, Ontario, in June 2020 with the launch of Voilà in the Toronto area, followed by the opening of a second facility in Pointe-Claire, Montreal, this past March to support the Voilà service in Quebec and Ottawa. In Western Canada, plans call for a third Ocado CFC in Calgary, Alberta, to begin deliveries in the fiscal 2024 first quarter and another CFC to open in Vancouver, British Columbia, in 2025.

In fiscal 2022, Empire also launched Ocado-powered curbside pickup at another 68 stores, for a total of 98 stores now providing the service. With the four CFCs — and supporting Ocado “spoke” facilities in Etobicoke, Ottawa and Quebec City — Empire expects its online grocery delivery and pickup services to serve approximately 75% of Canadian households, or about 90% of Canadians’ projected e-commerce spend.

Empire’s food retail network, operated via its Sobeys subsidiary, includes over 1,900 food, drug and convenience stores in all 10 provinces under banners such banners as Sobeys, Safeway, IGA, Foodland, FreshCo, Thrifty Foods, Farm Boy and Lawtons Drugs. The retailer also operates more than 350 retail fuel stations and runs grocery e-commerce operations under the Voilà, Grocery Gateway, and banners.

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