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A roundup of some of the North American equities making moves in both directions today

On the rise

Sobeys parent company Empire Company Ltd. (EMP.A-T) is continuing to see profits surge, as the COVID-19 pandemic has led people to stay closer to home and cook for themselves more often. And the company is seeing signs that the trend is continuing, even as the economy opens up.

The Stellarton, N.S.-based grocery retailer reported on Thursday that net earnings grew 47 per cent in its first quarter, to $191.9-million or 71 cents per share, compared to $130.6-million or 48 cents per share at the same time last year.

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It shares rose 4.3 per cent on Thursday.

“Management continues to anticipate that even as Canadians return to work and school, that a percentage of the consumption that has shifted from restaurants and hospitality businesses to grocery stores will remain in grocery stores,” the company said in a statement Thursday. Empire owns grocery chains including Sobeys, Safeway, Foodland, FreshCo, IGA and others.

Empire’s same-store sales growth – an important metric that tracks growth not including the impact of new store openings – was 8.6 per cent in the 13 weeks ended Aug. 1, or 11 per cent not including fuel sales at its locations with gas stations. Such increases are significant in the sector: at the same time last year, Empire’s same-store sales growth was 2.4 per cent not including fuel sales.

Empire reported $7.4-billion in total sales in the first quarter, compared to $6.7-billion in the same period last year.

- Susan Krashinsky Robertson

Transcontinental Inc. (TCL.A-T) rose 3 per cent in the wake of the Wednesday after-market release of better-than-anticipated financial results.

On Wednesday, the Montreal-based packaging, commercial printing and specialty media company reported revenue of $587.4-million, down 19 per cent year-over-year and narrowly below the consensus projection.

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However, EBITDA of $139.3-million blew past the Street’s forecast ($104-million), due largely to strong packaging results and a greater-than-anticipated contribution from the Canada Emergency Wage Subsidy. Earnings per share of 78 cents also topped the consensus (46 cents).

JetBlue Airways Corp. (JBLU-Q) finished flat after it said on Thursday it will add 24 routes later this year as the airline looks to generate cash and said it plans to fly some temporarily parked jets to the new destinations.

The new routes will be in regions where the company anticipates increasing demand for leisure travel, JetBlue said.

New York-based JetBlue said in June it would add 30 new domestic routes and entered a strategic partnership with American Airlines Group Inc to boost flying options in New York and Boston.

JetBlue previously said it expects third-quarter capacity to be down at least 45 per cent versus last year, following a conservative approach to adding flights back to its schedule.

The airline had US$3.4-billion of liquidity at June end, and had earlier forecast a daily cash burn between US$7-million and US$9-million in the third quarter.

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Tiffany & Co. (TIF-N) was up 0.4 per cent after LVMH said on Thursday it would sue the U.S. jeweller to fight off its accusations that it was deliberately trying to bow out of an acquisition deal and to challenge its handling of the coronavirus crisis.

The conglomerate behind brands such as Louis Vuitton, led by billionaire Bernard Arnault, said on Wednesday it could not complete its US$16-billion Tiffany purchase after the French government requested a delay on closing the transaction.

Tiffany had already filed a lawsuit against LVMH in Delaware - the U.S. state in which the New York-based company is registered - to force it to complete the deal as agreed last year.

“LVMH was surprised by the lawsuit filed by Tiffany against the group,” it said in a statement, calling it unfounded. “LVMH will defend itself vigorously.”

On the decline

Airline and tour operator Transat AT Inc. (TRZ-T) declined 1.8 per cent after saying it needs more cash to survive the pandemic that hammered demand for air travel, but its ability to borrow is restricted by the stalled Air Canada takeover deal.

Montreal-based Transat said on Thursday it is in “advanced discussions” to obtain financing and reissued a call for a government bailout to bolster its cash reserves of $576-million.

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Transat outlined measures it has taken to cut costs and preserve its bank balance, including layoffs, refusing to give customers refunds for cancelled flights, using a credit facility worth $50-million, renegotiating with suppliers and retiring its Airbus 310 fleet.

“Preserving cash is a priority for the corporation and other opportunities are being evaluated to achieve this objective,” said Transat, which agreed to the Air Canada takeover in 2019.

Air Canada shares were narrowly lower.

- Eric Atkins

Waterloo, Ont.-based tech firm Descartes Systems Group Inc. (DSG-T) slid 6.5 per cent despite its quarterly results exceeded expectations on the Street

On Wednesday after the bell, the Waterloo, Ont.-based tech firm reported second-quarter revenue rose 4.4 per cent year-over-year to US$84-million, topping the Street’s US$81.4-million estimate. Earnings per share rose 20 per cent to 12 US cents, matching the consensus forecast.

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In a research note, Raymond James' Steven Li, who raised his target for Descartes shares to US$58 from US$42, said: “DSG remains well positioned to benefit from the dynamic global environment and growing importance of supply chains coming out of this pandemic."

Roots Corp. (ROOT-T) was lower by 0.7 per cent after the retailer reported a $1.8-million loss in its latest quarter as its sales fell 38 per cent compared with a year ago due to the COVID-19 pandemic.

Sales in what was the company’s second quarter totalled $38.2 million, down from $61.7 million a year ago.

The clothing retailer says the drop in sales was due to temporary store closures, a phased reopening with reduced operating hours and strict physical distancing measures, partially offset by a gain in e-commerce sales that nearly doubled compared with a year ago.

Roots says its loss amounted to four cents per share for the quarter ended Aug. 1 compared with a loss of $9.7 million or 23 cents per share a year ago.

On an adjusted basis, Roots says it lost four cents per share for the quarter compared with an adjusted loss of 15 cents per share in the same quarter last year.

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Analysts on average had expected an adjusted loss of 20 cents per share for the quarter, according to financial markets data firm Refinitiv.

Citigroup Inc. (C-N) was down 0.9 per cent after announcing Chief Executive Officer Michael Corbat will step down in February 2021, after 37 years with the bank, and will be succeeded by President Jane Fraser, making her the first-ever woman executive to head a major Wall Street bank.

Ms. Fraser has been seen as a rising star on Wall Street, and last year was seen as a CEO candidate by Wells Fargo & Co’s board. The bank eventually settled on former JPMorgan executive Charles Scharf.

A 16-years veteran at Citi, who first joined to run client strategy in the investment bank, Ms. Fraser was promoted to the role of president in October last year.

She had been running the bank’s Latin America business, including its Citibanamex division in Mexico, before that.

U.S. railroad operator Kansas City Southern (KSU-N) slipped 0.1 per cent after the the Wall Street Journal reported it has rejected a US$20-billion takeover offer.

The buyout consortium led by Blackstone Group Inc and Global Infrastructure Partners had offered Kansas City Southern US$208 a share, which the company rejected, saying it undervalued the firm, according to the report.

Kansas City Southern, with market capitalization over US$17-billion, did not immediately respond to Reuters request for comment.

Walt Disney Co. (DIS-N) sat 0.2 per cent lower amid reports Chinese authorities barred major media outlets from covering the release of Mulan, in an order issued after controversy erupted overseas over the film’s links with the Xinjiang region.

Chief Financial Officer Christine McCarthy said at an investor conference on Wednesday the company is “very pleased” with initial results of its unusual release strategy for the live-action movie epic.

Due to the coronavirus pandemic, Mulan was made available for purchase in the United States on the Disney+ streaming platform over the Labor Day weekend, and in movie theaters in a handful of other countries.

The film will debut in cinemas in China, the world’s second largest movie market, on Friday.

“We are very pleased with what we saw” over the Labor Day weekend, said Ms. McCarthy, who spoke via online video to the Citi 2020 Global Technology Conference.

Mulan, a US$200-million remake of an animated Disney classic about a female warrior in China, was designed to appeal to audiences in the country. But the movie has run into controversy over its star’s support of Hong Kong police and for being partly filmed in the Xinjiang region, where China’s clampdown on ethnic Uighurs and other Muslims has been criticized by some governments, including the United States, and human rights groups.

With files from staff and wires

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