Empire Co. Q2 Profit Grows on Sobeys Purchase

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Empire Co. Q2 Profit Grows on Sobeys Purchase

STELLARTON, N.S. -- In the wake of taking No. 2 Canadian retailer Sobeys private in June, Empire Co. Ltd. posted second-quarter net income of 4.7 percent to CAN $58.4 million (US $57.3 million), or 89 cents a share, up from CAN $55.8 million (US $54.7 million), or 85 cents a share.

Revenue for the quarter ended Nov. 3 rose 3.9 percent to CAN $3.48 billion (US $3.41 billion, vs. CAN $3.35 billion (US $3.28 billion) last year. Food division revenue came to CAN $3.41 billion (US $3.34 billion), a rise of CAN $155.1 million (US $152.0 million) or 4.8 percent compared with the year-ago period. Same-store sales at Sobeys went up 2.3 percent.

Sales were also improved by the acquisitions of Achille de la Chevrotiere Ltee and its associated companies in August 2006 and Thrifty Foods last September, according to Empire, which said that both transactions grew second-quarter sales by CAN $103.5 million (US $101.4 million ) vs. last year.

Empire c.e.o. Paul Sobey said in a statement that the earnings increase was "largely the result of having 100 percent ownership of Sobeys." He added that the retailer's "continued solid same-store sales and operating income growth resulted from consistently competitive pricing and programs, innovation, cost management initiatives and improving day-to-day execution."

Empire purchased the 28 percent of Sobeys it didn't already own for CAN $1.06 billion (US $1.04 billion), with the aim of renovating shopping centers and adding locations. Sobeys gained 26 stores during the quarter, 20 of them a result of the Thrifty Foods acquisition. The grocer also reduced prices to better compete with Wal-Mart.