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Residents of Nova Scotia shop at a local Sobeys supermarket. (Ingrid Bulmer/CP)
Residents of Nova Scotia shop at a local Sobeys supermarket. (Ingrid Bulmer/CP)

Empire adjusted profit boosted by real estate Add to ...

Empire Co. Ltd. , parent of Sobeys, Canada’s No. 2 grocer, reported higher adjusted quarterly earnings on Tuesday, helped by its real estate investments.

Sobeys’ contribution to adjusted earnings, excluding minority interests, was little changed from the same quarter last year, at $65.5-million, compared with $65.4-million.

But Empire’s other operations contributed $6.7-million, versus $3.0-million a year earlier. Earnings were helped in part by higher revenue from Empire’s investment in Crombie Real Estate Investment Trust.

Last month, Crombie reported a 5.4-per-cent rise in property revenue for the quarter ended Dec. 31. For the entire year, Crombie said it provided a total unitholder return of more than 17 per cent.

The REIT invests in income-producing retail, office and mixed-use properties in Canada, and owns a portfolio with commercial properties in eight provinces.

Empire said earnings were also helped by higher average selling prices on residential lots. The company has a stake in Genstar, which is primarily a residential developer.

Sobeys’ gross profit margin improved slightly to 24.1 per cent, compared with 23.9 per cent in the same quarter last year. Canadian grocers have struggled to raise prices in line with inflation in recent quarters, as Wal-Mart Stores Inc. expands rapidly in the country.

Besides Wal-Mart Canada, Sobeys competes with Loblaw Cos. Ltd., Canada’s biggest grocer, and No. 3 player Metro Inc.

Sales at established Sobeys stores, seen as a key measure for retailers, rose 1.2 per cent in the quarter. Sobeys’ total sales rose 2.9 per cent to $3.94-billion.

Empire’s net income for the quarter ended Feb. 4 fell to $80.0-million, or $1.17 a share, from $88.9-million, or $1.31, a year earlier.

But adjusted earnings rose to $72.2-million, or $1.06 a share, from $68.4-million, or $1.01 a share. Overall sales rose 2.8 per cent to $3.98-billion.

Analysts, on average, had expected earnings of $1.10 a share, according to Thomson Reuters I/B/E/S.

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