Empire taps into Scene+ data to power promotional strategy
Executives discussed personalization, inflation and labour agreements on the company's first quarter earnings call with analysts.
As its Scene+ loyalty program counts 14 million members, Empire Company Ltd. is using that consumer data to create a more personalized shopping experience.
“We have better visibility on what our customers are buying or not buying in our network. We’ll offer them promotion and product that we believe will meet their needs,” Pierre St-Laurent, chief operating officer, told analysts on Empire’s earnings call Thursday (Sept. 14). “We have a large range of data that we are using now, and we are learning from it… We see a lot of potential in switching gradually – consciously but gradually – from [mass promotion to personalization].”
Empire – which operates food retail banners including Sobeys, Farm Boy, Longo’s, FreshCo, Safeway and other chains – released its results for the first quarter of fiscal 2024 Thursday.
Net earnings came to $261 million, compared to $187.5 million in the same quarter last year. Sales were $8.08 billion, up from $7.94 billion last year.
"Fiscal 2024 is off to a good start, supported by stronger top-line performance in our Full-Service banners, continued double-digit sales growth in our discount banner and solid control over our retail margins," said President and CEO Michael Medline in a statement. "Despite the ongoing volatility that the market continues to face, the results we delivered in Q1 demonstrate our team's ability to consistently execute, regardless of the economic environment."
Medline told analysts the grocer’s internal inflation fell to its lowest rate in 17 months.
“We have positive indications this trend will continue. For example, in non-fresh categories, we implemented approximately one third of the value of cost increases in Q1 versus the prior year,” he said. “Nonetheless, the reality is that we continue operating in uncertain times with high market volatility, rising interest rates and inflationary pressures. Customers are continuing to adapt their purchasing behaviors in this environment, including trading down to cheaper alternatives and buying on promotion. Not surprisingly, in Q1 we saw greater uptake from customers of our flyer and in store promotions at both our full-service and discount banners. Our team remains focused on providing the best value and offering to customers, including growing our value size offering, increasing the number of products with Scene+ member pricing and expanding our Own Brands assortment this quarter, which continued to outpace the market with double digit growth.”
St-Laurent said Empire expects to see lower food inflation rates in the coming months.
“We are becoming cautiously optimistic that the consumer is going back to their previous behaviors and that inflation is going to greatly fall in grocery,” Medline said.
Same-store sales, excluding fuel, increased 4.1%, which St-Laurent attributed to continued strong transaction counts at Empire’s full-service banners.
“The biggest improvement is in the basket size, and our full service business basket size is back to where it was last year at the same time,” he said. “So, major improvement in our full service business. We continue to have higher transaction counts.”
The first quarter saw the completed sale of 56 retail fuel sites in Western Canada to Canadian Mobility Services Ltd. (a subsidiary of Shell Canada) for around $100 million, which resulted in a pre-tax gain of $90.8 million. The impact to net earnings for the quarter was $71.5 million.
Empire’s continued plans to “optimize its organization and improve efficiencies” resulted in a $7.1 million impact to net earnings in the quarter.
The grocer also received $0.4 million in insurance recoveries as a result of its cybersecurity breach in November 2022.
“The vast majority of our claims are now with our insurers for their review. These are complex claims, and we continue to expect additional recoveries throughout fiscal ‘24,” Matt Reindel, executive vice-president and chief financial officer, told analysts.
Medline also addressed the topic of labour disputes following the month-long strike of Metro workers in the Greater Toronto Area.
“We have many labour agreements every single year coming through. We just have so many in this grocery industry, it’s highly unionized,” he said. “Usually we settle them. We are fair, but as you can guess we don't take an unreasonable deal.”
Jillian Morgan is the digital editor with Canadian Grocer.
This article first appeared on Canadian Grocer on September 14, 2023.