Consumer spending showing signs of returning to normal, Empire says

Shoppers at a west-end Toronto Sobeys grocery store, Sunday, June 26, 2023. Empire Co. Ltd. says its first-quarter profit and sales rose compared with a year ago. THE CANADIAN PRESS/Graeme Roy

STELLARTON — Customer spending behaviour is showing some signs of returning to normal after high inflation and tariffs led to shoppers flocking to the discount shelves and Canadian-made products, the chief executive of Empire Co. Ltd. says.

“We continue to see progress in terms of the customers. They’re not trading down. In fact, in many areas, they’re trading up,” CEO Michael Medline said on an earnings conference call with analysts Thursday.

Medline said the company has been rolling out strong promotions, “but that promo offer isn’t being taken up quite as much as people are spreading their purchases over a larger basket.”

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Customers also continued to favour Canadian-made products months after the buy local movement took off in response to the trade dispute waged by the United States -- but the momentum has started to wear off.

“Even with the recent development on the removal of some Canadian retaliatory tariffs, we continue to see Canadian product sales continue to outpace U.S. product sales,” Medline said.

“However, over the last few months, the buy Canadian sentiment has moderated slightly from previous highs seen earlier in the year,” he added.

Canada dropped some retaliatory tariffs on American products starting Sept. 1 as the federal government continues to hash out a trade deal with the U.S.

Other grocers, including Metro Inc., have noticed a similar moderation in the buy Canadian trend in recent months.

Empire, which operates Sobeys, Safeway and other banners, reported profit attributable to owners of the company of $212 million or 91 cents per diluted share for the quarter ended Aug. 2. The result was up from a profit of $208 million or 86 cents per diluted share a year ago.

On an adjusted basis, Empire says it earned 91 cents per diluted share in its latest quarter, up from an adjusted profit of 90 cents per diluted share a year ago.

Sales for the quarter totalled $8.26 billion, up from $8.14 billion in the same quarter last year.

RBC analyst Irene Nattel said the result was in line with the forecast on revised metrics, “underpinned by solid merchandising strategies in place to address ongoing value-seeking consumer spending behaviour.”

She added that the grocer “continues to execute on its strategy to maximize revenues in full-service despite broader consumer movement to discount banners/channels, while growing its discount presence.”

Same-store sales rose 0.8 per cent as food same-store sales rose 1.9 per cent. Same-store sales for fuel fell 13.4 per cent, driven by lower prices due to the removal of the government carbon tax.

Medline said there were several factors that impacted this quarter’s food same-store sales, which made for a tough comparison to last year.

“Foremost was the boycott campaign against Loblaw last year,” he said.

“Another competitor in the West experienced a cyber event, which led to service disruptions and supply shortages for a period of time, and finally, there was a nearly one-month-long LCBO strike, which meant more customers purchased beer and wine in our stores.”

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Meanwhile, a colder May this year — which otherwise marks the beginning of barbecue season — also impacted the grocer’s sales in fresh and prepared foods, Medline added.

Empire is also planning to expand its store footprint, setting up 20 new storefronts this year.

“I think it’s always a competitive market, and we’ve got to compete,” Medline said. “We’ve got some very, very tough players, but I wouldn’t get my knickers in a knot over the real estate being put in.”

The grocer is also on the lookout for its next leader as Medline’s retirement in May 2026 nears.

Medline, who has been CEO of Empire since 2017, said it took him six years to turn the grocer’s fortunes around and establish the correct infrastructure. Empire acquired the Farm Boy chain in 2018 and Longo’s in 2021, while also expanding its FreshCo discount banner into Western Canada under his leadership.

“Whoever takes over has a much easier job, but it’s never easy and at least they’ve got all the tools to take us to great heights, so I feel good about that,” Medline said.

“The team that leads this and the CEO that leads this company afterward will take us higher because they’ll be able to build.”

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Ritika Dubey, The Canadian Press

This report by The Canadian Press was first published Sept. 11, 2025.