September 10, 2010 / 12:27 PM / 8 years ago

UPDATE 2-Empire profit slips, Sobey's same-store sales grow

* Revenue up 1.8 pct

* Same-store sales up 0.3 pct (Adds details, analyst’s comments, share price)

TORONTO, Sept 10 (Reuters) - Empire Co Ltd (EMPa.TO), parent of Canadian supermarket chain Sobey’s, posted a 9 percent drop in profit on Friday compared with a year-before quarter in which there were substantial capital gains.

A strong performance at Sobey’s, Canada’s second largest grocery chain, however, pushed Empire revenue and operating income higher in the latest quarter.

Same-store sales at Sobey’s were up 0.3 percent as store expansions offset a drop in prices.

“Some were expecting that to be negative ... so 0.3 percent growth — that’s good in this environment,” said Philip Bassil an analyst at Beacon Securities, noting the continuing lack of food-price inflation.

“Earlier in the year, things were expected to recover in the back half, so that might be pushed out a little bit.”

Empire said net earnings for its first quarter ended July 31 fell to C$81.6 million ($79.2 million), or C$1.19 a share, from C$89.7 million, or C$1.31 a share, in the year-before quarter.

The Stellarton, Nova-Scotia-based company had C$17.5 million in capital gains and other items a year earlier, but recorded none this quarter. Excluding capital gains, earnings rose 13 percent.

Analysts had on average estimated earnings of C$1.21 a share, according to Thomson Reuters I/B/E/S.

Revenue rose 1.8 percent to C$4.04 billion, while consolidated operating income rose 7.8 percent to C$140.8 million, bolstered by 3.8 percent growth at Sobey’s.

Empire shares were up 9 Canadian cents at C$53.94 on Friday morning on the Toronto Stock Exchange.

$1=$1.03 Canadian Reporting by Solarina Ho; editing by Peter Galloway

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