December 11, 2008 / 3:54 PM / 10 years ago

UPDATE 2-Empire Co profit jumps 12.5 pct on Sobeys strength

* EPS C$1.00 vs C$0.89

* Revenue C$3.73 bln

* Sobey’s same store sales rise 5.4 pct

* Shares gain 0.8 pct to C$47.39 (Adds details and analyst comments)

TORONTO, Dec 11 (Reuters) - Empire Co Ltd (EMPa.TO) reported a higher quarterly profit on Thursday as gains at its core Sobeys supermarket chain, Canada’s No. 2 grocery chain, helped it shrug off weak results from its real estate portfolio.

Empire said it earned C$65.7 million ($53.41 million), or C$1.00 a share, in its second quarter, up 12.5 percent from C$58.4 million, or 89 Canadian cents a share, in the same period last year.

Revenue rose 7 percent to C$3.73 billion, while same store sales at its Sobeys stores increased 5.4 percent.

Analysts were expecting, on average, earnings of C$1.10 a share and revenue of C$3.67 billion, according to Reuters Estimates.

The company’s shares rose 0.8 percent to C$47.39 on the Toronto Stock Exchange.

The company said Sobeys sales growth resulted from increased retail square footage, coupled with promotions and moderate food price inflation.

Sarah Chiasson, an equity analyst at Beacon Securities in Halifax, Nova Scotia, said Sobeys showed resilience given the slowing global economy and heightened competition and this should bode well in the coming months.

“Sobeys has a real strength in its promotional activity and bringing customers into its stores and I would say that is evident in the sales growth this quarter,” she said.

“That is something that should serve them well considering the economic slowdown.”

Canadian grocery chains such as Loblaw Cos (L.TO), which is No. 1 in the market, Metro Inc MRUa.TO and Sobeys have been forced to cut prices on key staples as they look to fend off stiff price competition from U.S.-based retail giant Wal-Mart Stores (WMT.N).

In late August, Wal-Mart decided to cut prices on food staples such as milk and bread in Ontario, Canada’s most populous province, in a bid to attract consumers who have been hit by the economic slowdown. ($1=$1.07 Canadian) (Reporting by Scott Anderson; editing by Peter Galloway)

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