January 18, 2016
Sobeys CEO cites progress
Local suppliers, health conscious consumers, could emerge as winners as grocer looks to buy more locally to address industry “transition.” Little “blowback” expected from rising prices.
Marc Poulin, the CEO of Empire Company, defended its performance today to an increasingly skeptical business community. Investors have driven the company’s stock price down almost 25% from its 52-week high, the worst record of all the country’s big three grocers.
“We are undergoing a strategic transformation,” said Poulin in prepared remarks delivered to 350 business people assembled at the Canadian Club of Montreal. “It’s an important industry transition point.” Poulin cited continued progress in integrating the operations of the recently acquired Safeway Stores, the company’s focus on healthy eating and shrewd currency management, as causes for optimism. “Canadians’ relationship with food is not what it should be,” said Poulin. “It takes courage to change that.”
Empire Group’s CEO also acknowledged the growing importance of currency fluctuations, citing the company’s move to acquire German software technology, back when the dollar was strong, as an effective move.
Buy local strategy emphasized
Poulin also reiterated Empire Company’s long-standing efforts to maximize local procurement. A large percentage of the company’s store managers are franchisees, who have a far better knowledge of local trends, tastes and product availability.
Those efforts have gained new momentum during past year, which has seen the Canadian dollar plunge close to 19 percent from USD $0.84 last May to the USD $0.68 range as of today. A falling dollar makes imported products more expensive for Sobeys, which must then pass on costs to consumers.
Little “blowback” expected from rising prices
Poulin refused to take questions from Montreal media representatives, many of whom were interested in asking about recent spikes in food prices. However Claude Tessier, president of the company’s IGA division said that he expects little or no “blowback,” noting that recent produce price increases, much of which stem from El Nino weather systems, which have affected Mexico and California, have hit all grocers equally. Effects of the weather systems on food production, which Tessier labelled as “the worst in 30 years” have caused sourcing challenges in fruits and vegetables ranging from grapes to cauliflower.
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