Sales for American Products ‘Rapidly Dropping,’ Says CEO of Sobeys Parent Company

Empire reported net earnings of CAD $146.1 million in the third quarter of fiscal 2025.

Canadians are abandoning American products at Empire Co. Ltd.'s stores as sales for U.S. goods "rapidly" drop, the company's CEO said.

“American products we are selling as a present percentage of our total sales are rapidly dropping,” said president and CEO Michael Medline.

On average, Empire — which operates Sobeys, Farm Boy, Longo’s, FreshCo and other retailer banners — sources 12% of its products from the United States.

But Medline said that number was already on the decline before trade relations between the U.S. and Canada deteriorated.

“[That number] will continue to [decrease] as we shift our supply to meet our customers’ growing demand for Canadian and non-American products,” he told analysts Thursday (March 13).

Medline’s comments follow that of Loblaw chief Per Bank, who said early February the grocer was seeing an “uplift” in sales for Canadian goods.

“We have been well positioned in supporting Canadian products for some time. Even before tariff tensions began escalating, we have seen sales of Canadian products outpace our overall sales growth,” Medline said. “And while it is still early days, we are now seeing this pick up further, especially since implementing new store signage and shelf labels to help customers find Canadian products.“

But even as Canadians show their pride with their shopping carts, Medline warns a weakening consumer environment poses the biggest threat to retailers.

“We'll be able to roll with the punches, and I think the industry will, to be honest with you. The bigger worry is if or when there's going to be more of an impact on the Canadian economy,” he said. “But even in times where the wind’s in our sails — which it may not be, by the way — we can navigate. I like the strategy we have right now in terms of in terms of being able to grow our business and be very safe going forward… And I believe that there are advantages to being a Canadian based retailer which keeps the money in our country, and that many Canadians will appreciate that.”

Medline said impacts of the tariff war could include increased costs or reduced assortment. But he doesn’t expect Empire to take a major hit.

But the executive warned there will be some headwinds, like the weakening Canadian dollar.

The executive said the business has a “strong plan” to deal with fallout from the duties — not to mention built-in resilience after years of turbulence, from COVID to high inflation and natural disasters.

For one, he said Empire has “developed a much larger and diversified source of supply to proactively manage threats.”

However, produce remains a pain point for Canadian retailers, as the country’s harsh winters make it difficult to grow some of the fruits and vegetables purchased from U.S. suppliers.

Medline said Empire is already hearing from some American vendors about price increases, but that the grocer is navigating those requests through “tough” discussions.

“In speaking to some of our suppliers, many do not see the benefit of trying to pass on tariff costs right now for two reasons,” he said. “First, they do not want their product to become less competitive on our shelves as a result of higher prices. And second, the backdrop is too volatile right now, with the on again, off again approach to tariffs. Instead, they are focused on thoughtful solutions, like looking at alternate sources of supply for input materials or alternate locations for manufacturing.”

As U.S. President Donald Trump’s unpredictable tariff threats continue to shake up Canadian businesses, Medline said Empire remains steadfast.

“If you reacted to every piece of news out there, you wouldn't be able to operate a business anymore. We don't do that. We're going to be calm and strong like the rest of this country.”

Q3 Highlights

Empire reported net earnings of CAD $146.1 million in the third quarter of fiscal 2025, up from CAD $134.2 million last year.

Sales came to CAD $7.73 billion, up 3.1%. Same-store food sales increased by 2.6%.

Executives say the gap between full-service and discount continues to close as shopper behavior becomes more predictable.

Notably, Empire reported “outsized growth” in fresh this past quarter and a decline in promotional penetration, said COO Pierre St-Laurent on Thursday’s call with investors.

The company said it’s on track with its plan to renovate 20% to 25% of its store network between fiscal 2024 and fiscal 2026.

This article was originally reported by sister publication Canadian Grocer.