Empire, owner of Sobeys, reports nil quarterly profit

Wed Mar 12, 2014 7:30pm EDT
 
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March 12 (Reuters) - Empire Co Ltd, the operator of Canadian grocery chain Sobeys, reported a steep fall in quarterly profit, hurt by higher inventory losses and higher costs due to a weaker Canadian dollar.

The company posted a increased loss of inventory between manufacturing and sale of Sobeys' fresh retail products.

Net earnings fell to C$40,000, or nil Canadian cents per share, in the third quarter, ended Feb 1, from C$74.1 million, or C$1.09 per share, a year earlier.

Empire reported third-quarter adjusted earnings of 84 Canadian cents per share, below analysts' estimate of C$1.23 per share, according to Thomson Reuters I/B/E/S.

Expenses related to Empire's acquisition of Safeway's Canadian assets also weighed on the company's profit.

Empire bought the assets for C$5.7 billion last year to double its reach in the country's western provinces.

Empire, which faces competition from bigger rival Loblaw Companies Ltd and U.S. retailers such as Wal-Mart Stores Inc and Target Corp, said its earnings were negatively affected by a highly promotional environment.

The company cemented its position as Canada's No. 2 grocer with the acquisition of Safeway Canada, which contributed C$1.62 billion to Empire's total sales in the third quarter.

Empire's total sales rose more than 40 percent to C$6.02 billion, helped by higher sales from its food retailing business.   Continued...