Sobeys addresses merchandising at Safeway stores

Safeway safeíndiceSobeys said it is not only working to integrate systems at the stores it acquired from Safeway last year but is also implementing merchandising programs to address concerns with sales in some categories.

In response to a question from a financial analyst, Marc Poulin, president and CEO of Empire Co., Sobeys’ corporate parent, said same-store sales trends at the Safeway stores “were below what we would have liked,” though he was not more specific.

“But we’re taking advantage of the opportunities we have with direct merchandising programs to address our concerns in some categories, and we’re working on the overall picture — not just integrating the stores but also moving the business forward dynamically.”

Poulin spoke Thursday with analysts to discuss financial results for the third quarter and 39-week period that ended Feb. 1. The third quarter was the first full period that reflected operations from the acquisition of Safeway’s 233 Canadian stores, which boosted Empire’s sales by $1.5 billion (U.S.)

Third-quarter sales at Sobeys — which represent approximately 99% of Empire’s results — rose 40.4% to $5.4 billion (U.S.), with same-store sales down 0.2%; excluding the Safeway stores, Sobeys sales were up 2.7%. For the 39-week period Sobeys’ sales rose 14.6% to $13.6 billion, while same-store sales fell 0.2%.

Net income for Empire fell 73.7% to $400,000 for the third quarter and declined 39% to $212.2 million, with sales climbing 14.6% to $13.6 billion.

Poulin said Sobeys is on track to achieve the targeted synergies from the former Safeway stores. “We are working diligently to successfully integrate the business and are focused on securing operational efficiencies and reducing costs across the network. We remain confident in our ability to secure $200 million in annual run-rate cost synergies over a three-year period.”

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