March 12, 2009 / 4:46 PM / in 9 years

UPDATE 1-Empire Co shares jump on strong results

* Shares up 7.5 pct to C$49.99 at midday

* EPS C$0.99 vs consensus C$0.75

TORONTO, March 12 (Reuters) - Empire Co Ltd’s (EMPa.TO) shares rose nearly 10 percent on Thursday after the supermarket operator reported results that handily topped expectations.

Empire reported a 26.5 percent rise in quarterly profit after the markets closed on Wednesday, driven by gains at its core Sobeys supermarkets, Canada’s No. 2 grocery chain.

“This is a company that’s in a positive perfect storm. They are executing very well and are benefiting from strong inflation. Their initiatives over the past bunch of years are all paying off now and the competitive environment is incredibly benign,” said David Hartley, a retail analyst at BMO Capital Markets.

Net income rose to C$61.5 million ($47.9 million), or 94 Canadian cents a share, in its third quarter which ended Jan. 31, up from C$48.6 million, or 74 Canadian cents, in the same period last year.

Excluding capital losses and other items, earnings rose to C$65 million, or 99 Canadian cents per share, from C$48.9 million, or 74 Canadian cents, a year earlier.

Revenue rose about 9 percent to C$3.80 billion, while sales at Sobeys stores open for at least a year increased 7.6 percent.

Analysts, on average, had expected earnings of 75 Canadian cents a share, excluding items, on revenue of C$3.66 billion, according to Reuters Estimates.

Despite the strong quarter, Sobeys Inc Chief Executive Bill McEwen refused to pinpoint one specific area for the improved performance.

“There is no silver bullet. There is no one crescendo. There is no singular event. There is no one thing that if we didn’t do it, it would have a dramatic negative impact on our results and there is no single thing that is making the difference,” he told analysts.

“It is the aggregate of the detail of retail and the diligence of cost and productivity and the focus on execution.”

Canada’s top grocers including Loblaw Co (L.TO) and Metro Inc MRUa.TO have proved resilient during the economic downturn, all posting strong results, as consumers forego restaurant visits in favor of more homecooked meals.

The company also said it planned to cut its 2009 capital spending by about 10 percent to C$400 million from an earlier target of C$450 million.

Hartley said the move was in line with most of its peers in the grocery industry as they hoard cash to boost their credit rating in the current economic downturn.

“This is no different than any other grocery retailer in Canada or the U.S.,” he said. “So it is not a big surprise.”

Shares of the company were up 7.5 percent at C$49.99 on the Toronto Stock Exchange by late morning, after climbing as high as C$50.75 earlier in the day.

Additional reporting by Ajay Kamalakaran in Bangalore $1=$1.29 Canadian Reporting by Scott Anderson; Editing by Frank McGurty

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