STELLARTON, CANADA - Sobeys' parent company released the results for its second quarter of 2016, yielding a challenging few months for the chain.
According to the report, the retailer saw recorded adjusted net earnings of $110.7 million ($0.40 per diluted share) compared to $126.6 million ($0.46 per diluted share) this time last year, a 12.6 percent decrease.
“As anticipated, our second quarter results continued to trail performance versus the same period last year as the integration of Safeway continues to present challenges,” Marc Poulin, President and CEO of Sobeys parent company Empire Company Limited said, according to the report. “While we made progress in the adoption of new processes following the implementation of new technology systems, the challenges persisted.”
Poulin explained that same-store sales were below in the second quarter, which he attributed a customer reaction to the chain’s operational challenges and a “difficult economy in the west.”
Highlights of the financial quarter include:
- Sales of $6,059.2 million, up $64.1 million or 1.1 percent.
- Sobeys’ same-store sales (1) excluding fuel sales increased 0.9 percent. Including fuel sales, same-store sales increased 0.1 percent.
- EBITDA (1) of $256.3 million compared to $323.8 million last year, down $67.5 million or 20.8 percent.
- Adjusted EBITDA (1) of $303.7 million compared to $331.0 million last year, down $27.3 million or 8.2 percent. Net earnings, net of non-controlling interest, of $68.5 million compared to $116.9 million last year, a decrease of $48.4 million or 41.4 percent.
- Adjusted net earnings (1), net of non-controlling interest, of $110.7 million compared to $126.6 million last year, a $15.9 million or 12.6 percent decrease.
- Adjusted EPS (2) (fully diluted) of $0.40 compared to $0.46 last year, a 13.0 percent decrease.
- Funded debt to total capital (1) ratio of 29.1 percent versus 27.7 percent at May 2, 2015.
However, Poulin expressed that Empire—and subsidiary banner Sobeys—will now be able to turn its merchandising team’s focus on improving its overall offering and strategy.
“This marks a critical milestone in the second phase of our Safeway integration strategy, which entails consolidating the majority of our Western Canada back office functions and processes in Calgary. This will yield meaningful cost savings and improve long-term profitability.”
Overall, the chain expressed confidence in being able to turn its financial performance around, still planning to realize, if not exceed, its three-year run rate Safeway integration synergy target of $200 million.
