Empire reports Q4 profit up, CEO says food inflation at its stores remained stable

Shoppers at a west-end Toronto Sobeys grocery store, Sunday, June 26, 2023. THE CANADIAN PRESS/Graeme Roy

Empire Co. Ltd.’s top executive said the company’s price inflation remained stable during its latest quarter and that he expects the trend to continue, as the grocery retailer reported its latest financial results.

The company, which operates Sobeys and Safeway, among other banners, reported Thursday that its fourth-quarter profit and sales rose compared with a year ago. It also announced it will now pay a quarterly dividend of 22 cents per share, up from 20 cents.

Empire president and CEO Michael Medline said the company’s internal inflation calculations during the quarter were “way under” food inflation in the consumer price index.

“Let me be crystal clear, we are not seeing inflation in our business outside of historical norms, and Empire’s price inflation has remained very stable,” Medline told a conference call with financial analysts to discuss the company’s latest results.

The latest Statistics Canada inflation data for the month of April showed food prices purchased from stores rose 3.8 per cent year-over-year, a faster pace than headline inflation, which was 1.7 per cent.

Going forward, Medline said he expects food inflation to remain in line with long-term averages.

“Over the last 25 years, CPI’s food inflation purchased from stores has averaged three per cent. While there may be some ups and downs, we believe this trend will hold,” he said.

“All to say, we are unable to reconcile what we are hearing or reading about inflation in the media, in food, or from some in the industry, to what we’re actually experiencing.”

Medline said the company’s approach to managing the effect of tariffs included buying more local products, leveraging supply sources outside of the U.S. and having “tough discussions with suppliers” regarding cost increases stemming from the border levies.

He said the trend of Canadians favouring domestic products continued during its fiscal fourth quarter, adding that he believes “much of this behaviour is becoming sticky.”

“It doesn’t take a lot of people changing behaviour to make a real difference in retail, especially in the grocery business. And there are people who have changed their behaviours, (who) will not go back. And we’re doing our utmost to make them very happy in our banners,” he said.

Empire has been working to shift its supply chain to favour domestic producers as shoppers gravitate toward Canadian-made products in retaliation against U.S. President Donald Trump’s tariffs and annexation threats.

“It is clear that our customers are voting with their wallets as our sales of Canadian products continue to rise,” Medline said.

Additionally, he noted Empire’s sourcing of U.S. products has “continued to drop,” a trend he expects to continue heading into the growing season for Canadian produce.

Empire said it earned a profit attributable to owners of the company of $173 million or 74 cents per diluted share for the quarter ended May 3. The result was up from a profit of $149 million or 61 cents per diluted share a year ago.

Sales for the quarter totalled $7.64 billion, up from $7.41 billion in the same quarter last year.

Same-store rose three per cent as same-store sales for fuel fell 7.8 per cent driven by lower prices due to the removal of the government carbon tax. Food same-store sales rose 3.8 per cent.

On an adjusted basis, Empire says it earned 74 cents per diluted share in its latest quarter, up from an adjusted profit of 63 cents per diluted share a year ago.

The company also said it’s on track with its plan to renovate around 20 to 25 per cent of its store network between the 2024 and 2026 fiscal years.

This report by The Canadian Press was first published June 19, 2025.