The head of Canada’s second-largest grocery chain has called suggestions that the country’s major grocers are using their market power to take advantage of “reckless” and “scorching” inflation, calling critics making such assertions as lazy “chair players” who don’t know much about the items trade. food.
Michael Medline, CEO of Empire Co. Ltd. , which operates 1,600 stores under the Sobeys, Safeway, FreshCo, IGA and Farm Boy banners, made the extraordinarily poignant comments at his company’s annual general meeting on Thursday. Earlier, Stellarton, N.S. . Empire mentioned Net income was $187.5 million in the fourth quarter, little changed from the prior year.
“Quite frankly, I’m sick of those armchair attendants who make so little effort to understand even the basics of our business, but are comfortable sitting on the sidelines voicing how Canadian companies are making unreasonable profits on the back of inflation,” Medline told assembled shareholders. In a movie theater in New Glasgow, NS
He continued, “This is not true at all.” “These reckless and incendiary attacks are meant to divide us, sitting in stark contrast to the cooperation and problem-solving we have seen in the darkest moments of the pandemic.”
The Medline notes represent the most aggressive attempt yet by anyone in the grocery business to undo a summer of bad press that has sparked resentment among customers and threatens to attract the attention of politicians who have shown a new interest in competition politics.
Canada’s top grocery sellers have faced a setback in recent months to profit gains as shoppers faced the highest grocery inflation since the 1980s. The Empire and its main competitors in the industry – Loblaw Companies Ltd and Metro Inc. The criticisms are unfounded and misleading. That didn’t stop mounting accusations of corporate greed from turning into a PR headache for the industry, which was just getting rid of Hero salary scandal for 2020 – not to mention the ongoing federal investigation into An alleged scheme to determine the price of bread And the Protracted government campaign To prevent grocers from bullying their suppliers.
David MacDonald, economist at the Canadian Center for Policy Alternatives, has written Excess corporate profits and fatter profit margins in the food trade were driving up inflation. a Toronto Star Investigation The post in July came to a similar conclusion. Last month, the Financial Post worked with accounting and auditing experts to analyze financial statements from the three largest grocers, and found More complex picture From those drawn by MacDonald and the star.
Medline told shareholders that the scrutiny has been fueled by “a handful of politicians, media sources and think tanks — not because we’re struggling, but because we’ve been so successful in this challenging environment of high inflation.” “I think it makes headlines easy and ignores what’s really driving our success,” he added. “I refuse to apologize for our success.”
Empire previously said its margins and profits are improving, in part, because of Project Horizon’s three-year strategy to expand the FreshCo and Farm Boy brands, while using e-commerce and analytics to drive revenue growth.
In an earnings update ahead of the annual meeting, Empire reported that profits fell slightly in the first quarter, despite an increase in sales.
Sales in the quarter ended August 6 were up 4.1 percent compared to the same period last year. The jump came from rising food and fuel sales, which were affected by higher commodity prices this year, as well as its expansion of FreshCo in western Canada, the company said.
Discount stores like FreshCo have pulled sales away from traditional groceries this year, as more shoppers are looking for deals as household food bills rise. In its latest release Consumer Price Index Last month, Statistics Canada found that grocery prices rose 9.9 percent year on year in July.
But Empire’s earnings were $187.5 million, down $1 million, or 0.5 percent, from last year. Earnings per share were 71 cents in the first quarter, below expectations of 74 cents, but 1 percent higher than a year earlier. RBC analyst Erin Nettle said the results were “robust,” although Empire failed to meet EPS expectations.
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The company had a slightly lower margin in the quarter, which it blamed in part on higher supply chain costs. Empire’s gross margin — a measure of the profit the chain has left after accounting for the cost of buying merchandise and managing stores — fell to 24.9 percent from 25.1 percent last year. The company said its gross margin would be 63 basis points higher than last year, were it not for the impact of fuel sales.
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