Empire Company Ltd. reported record first-quarter earnings per share of CAD 1.04, rising 14.3% from a year earlier, but shares remained flat as revenue narrowly missed expectations.
The company, which operates the Sobeys, Safeway, IGA and FreshCo banners, posted fiscal Q1 2027 EPS of CAD 1.04, topping the CAD 1.03 forecast by roughly one cent. Revenue came in at CAD 8.48 billion, a 0.5% decline that fell short of the CAD 8.52 billion consensus estimate. Food sales rose 1.7% year-over-year, while same-store sales increased 1.2%. E-commerce sales jumped 11.3% across internal platforms and third-party partnerships.
Earnings before interest, taxes, depreciation and amortization reached CAD 712 million, up 6.1%, marking what Chief Financial Officer Constantine Pefanis called "the strongest EBITDA performance we have delivered since Project Horizon began more than 10 years ago." EBITDA margin expanded 28 basis points to 8.4%. Gross margin, excluding fuel, was essentially unchanged from a year earlier. SG&A expenses as a share of sales improved by 80 basis points on a rate excluding depreciation and amortization. The effective tax rate came in at 26.1%, compared with 26% last year.
"We delivered a record high first quarter EPS of CAD 1.04, up 14.3% year-over-year. This performance reflects improvement in our core business and benefit from our cost efficiency initiatives," President and CEO Pierre St-Laurent said. He added that the company is "gaining share in full service while maintaining our position in discount, despite the rapid expansion of discount formats across the market."
For the full fiscal 2027 year, Empire expects adjusted EPS growth at the high end of its long-term framework of 8% to 11%. It reiterated a target of 10 to 20 basis points of annual gross margin expansion excluding fuel. Store openings were raised to more than 25, up from a prior plan of more than 20, delivering approximately 2% square footage growth. Capital expenditures are projected at roughly CAD 850 million, with about half allocated to renovations and new store growth. Other income from equity investments is expected to total between CAD 90 million and CAD 110 million, with a quarterly cadence of roughly 15% in Q2, 20% in Q3 and 50% in Q4. The company also disposed of its equity interest in Genstar for CAD 71 million, resulting in a CAD 4 million gain.
The stock traded at $47.87 in premarket action, up just 0.23%. It sits about 9.1% above its 52-week low of $43.81 and 9.1% below its 52-week high of $52.64.
Empire repurchased approximately 2 million shares for CAD 95 million during the quarter. It pays a dividend yielding 2.03%, backed by 31 consecutive years of increases. The Altman Z-Score stood at 4.77.
On leadership changes, Nitu Singh joined as senior vice-president of pharmacy in August, Lara Skripitsky was named chief technology and transformation officer, succeeding Julia Knox. Doug Nathanson remains chief pharmacy and development officer.
