Empire profit misses estimates as competition intensifies

Thu Sep 12, 2013 8:06am EDT
 
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(Reuters) - Canada's Empire Co Ltd (EMPa.TO: Quote), parent of Sobeys grocery chain, reported an adjusted profit from continuing operations that missed analysts' estimate as competition intensified.

The company attributed a 40 percent fall in first-quarter net profit to higher promotional activities and expenses related with the acquisition of the Canadian assets of Safeway Inc SWY.N.

Empire bought Canada Safeway for $5.7 billion in June to bulk up its business as U.S. retailers Wal-Mart Stores Inc (WMT.N: Quote) and Target Corp (TGT.N: Quote) expand in the country.

Loblaw Cos Ltd (L.TO: Quote), Canada's biggest grocery chain, consolidated pharmacy assets with a C$12.4 billion deal to buy Shopper's Drug Mart Corp SC.TO in July.

Empire's total sales increased to C$4.61 billion ($4.46 billion) in the quarter ended August 3 from C$4.51 billion a year earlier.

Analysts on average had expected revenue of C$4.72 billion, according to Thomson Reuters I/B/E/S.

Sales at Sobeys, Empire's food retailing unit, rose 2.2 percent to C$4.59 billion.

Net earnings from Empire's continuing operations fell to C$82.6 million, or C$1.21 per share, from C$108.1 million, or C$1.59 per share.

Adjusted earnings from continuing operations fell 19 cents to C$1.32 per share, compared with analysts' estimate of C$1.55 per share.   Continued...