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Empire profit slips on heavy competition Add to ...

Sobeys parent Empire Co. Ltd. says it earned $62.8-million in its third quarter, down 8 per cent from a year earlier as competition in Canada's grocery industry heated up.

The profit equalled 92 cents per share, compared with 99 cents per share or $68.3-million at the same time last year.

Sales were up to $3.88-billion compared with $3.84-billion as Sobeys opened new stores and expanded older ones, and continued with sales and merchandising initiatives, and other store improvements.

But it said same-store sales decreased 0.4 per cent as it experienced retail price competition, which partially offset growth.

Sobeys and the other national grocery chains have been experiencing stiff competition, particularly in Ontario, from each other and other retailers such as Wal-Mart, Zellers and Shoppers Drug Mart that have grown their food offerings.

"Our third-quarter financial results are consistent with our expectation and reflect continued intense competitive activity in the retail food market," Paul Sobey, Empire Company president and CEO said in a statement.

"We remain confident that Sobeys' focus on executing its strategy, differentiating its retail food offering, and reducing costs through its productivity and systems initiatives will continue to build long-term sustainable value."

Empire said capital gains and other items net of tax, were $2.8-million compared to none last year.

Six million in pre-tax costs associated with a new distribution centre in Quebec is included in the company's earnings before capital gains. Empire said the new centre would allow Sobeys to increase its warehouse and distribution capacity for Quebec, while reducing overall distribution costs.

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