Nova Scotia-based Empire Company Limited (OTC: EMLAF) (Toronto: EMP.A) is the parent company of the Sobeys and Safeway supermarket chains, notes Gavin Graham, contributing editor to Internet Wealth Builder.

Empire also owns the IGA, FreshCo, Thrifty, Farm Boy, and Lawton’s Drug Stores chains and 41.5% of the Crombie REIT (CROMF), which in turn owns many of its supermarket locations. It owns 1,500 stores and 350 retail gas stations in 10 provinces and employs 125,000 people.

Empire has performed strongly as a major beneficiary of the pandemic, as well as reflecting the success of the turnaround effort, named Project Sunrise, implemented in 2017.

The company has since launched Project Horizon, a three-year program to increase EBITDA by $500 million and gross margin by 100 basis points. Some 22 of the 65 locations for the FreshCo rollout in western Canada have been converted, with eight in development.

The Voila by Sobeys e-commerce food delivery service went live in the Toronto area. Empire launched a new national campaign for its Compliments brand label.

Sales for the first quarter of Empire’s financial year, ended Aug. 1, saw Same Store Sales Growth (SSSG) from stores open at least twelve months increase 8.6%. Excluding lower fuel sales due to lower driving during the pandemic, the gain was a remarkable 11%.

The company’s debt was upgraded to investment grade. The dividend was increased from $0.12 a quarter to $0.13 ($0.52 a year), the twelfth consecutive year it has been increased. The yield is 1.35%.

Empire has successfully turned itself around and is benefiting from the switch to fewer, but larger grocery stores due to the pandemic as well as the roll-out of its Farm Boy and FreshCo brands and the Voila initiative, which will launch in Montreal next spring. Empire Company remains a "Buy".

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