Empire Co. Ltd.’s extremely weak third quarter results, thanks to a clear, crisp gross margin pullback in food retailing, is the result of a deterioration in its Western Canadian business.
But as CIBC World Markets analyst Mark Petrie stated, a lot of the harm, which translated into a $1.73 billion write-down, was self inflected.
It “comes from poor execution round the combination of the Sobeys and Safeway businesses,” he explained inside a research note.
Yes, the organization takes stems to enhance its offerings to Safeway shoppers, but Petrie warned that gaining traction won’t be simple.
Much of the may be the consequence of the ultra-competitive supermarket environment.
The somewhat great news is that traffic at Safeway stores isn’t terrible. However, what strength there’s in this way, is because of customers cherry picking deals present in flyers C much more of a problem than the usual positive thing.
“This kills the expected product mix C a crucial element for a grocer,” Petrie said.
“To make matters worse, shoppers in Alberta and Saskatchewan are becoming increasingly cautious, and where the issues had largely been Safeway-centric, trends in the Sobeys banner will also be softening,” he added.