Customers enter and leave a Sobeys store in Toronto. Parent company Empire reported same-store sales growth of 1.2 per cent in the quarter, below analyst expectations.Graeme Roy/The Canadian Press
The Canada-U.S. trade war is once again igniting talk among shoppers about buying Canadian, and grocery retailers are responding by promoting domestic products on their shelves, and advertising their own Canadian roots. But that sentiment is not yet showing up in sales trends, executives from Sobeys parent Empire Co. Ltd. EMP-A-T said on Thursday.
“We know there’s a sentiment out there from the customer to buy Canadian products, but it’s too early to see any signs of that in our POS [point-of-sale] data,” Empire chief customer officer Luc L’Archevêque said during a conference call to discuss the company’s first-quarter results.
While customers are interested in supporting Canadian businesses, their purchasing decisions are also being driven by “value, quality and convenience,” chief executive officer Pierre St-Laurent said.
The escalating tensions with Canada’s largest trading partner are contributing to heightened caution among shoppers.
“The market environment remains challenging, and consumers continue to be focused on value and affordability, given fuel price volatility and ongoing trade-related uncertainty,” Mr. St-Laurent said. “Across North America, retailers are reporting a more cautious customer environment, and we are seeing many of the same trends here in Canada.”
The Stellarton, N.S.-based retailer, which owns chains including Sobeys, Safeway, IGA, Farm Boy and discounter FreshCo, reported its sales grew to nearly $8.5-billion in the first quarter ended Aug. 1, up 2.6 per cent compared with the same period last year.
Empire said sales grew in both its discount and conventional grocery stores. Still, like other major grocers, Empire has noted that shoppers continue to visit discount stores more frequently, and has committed to building more off-price locations in response.
“It’s nothing new, customers are looking for value. They are making different choices considering the fuel price volatility,” Mr. St-Laurent said.
Last month, the company opened two new FreshCo stores in Atlantic Canada – its first locations under that discount banner in the region. Empire plans to open 13 more FreshCo stores across the country this fiscal year.
Same-store sales – which track the performance of locations open for more than a year, and excludes the sales impact of store closings or new openings – grew by 1.2 per cent at the company’s grocery locations.
That fell below analysts’ expectations of 1.7-per-cent sales growth, according to consensus estimates compiled by S&P Capital IQ.
Net earnings grew to $233-million or $1.04 per share in the first quarter, compared to $212-million or 91 cents in the same period last year.
Fuel sales at Empire’s gas stations rose by 18.4 per cent in the quarter, as the conflict in the Middle East pushed gas prices higher.
E-commerce sales grew by 11.3 per cent year-over-year. Empire’s online strategy is evolving, after it shut down its Voilà e-commerce facilities in Alberta earlier this year, and took a $746-million writedown on the business, saying the financial results fell short of expectations.
Empire opted to end its exclusive relationship with e-commerce technology partner Ocado earlier than expected. Since then, the company has begun working with third-party delivery services Instacart, Uber Eats and Door Dash, which contributed to the growth in online sales in the quarter.