The head of Canada's second- largest grocery chain called suggestions the country's big grocers are exploiting their market power to profit from inflation "reckless" and "incendiary" and characterized the critics who are making such assertions as lazy "armchair quarterbacks"
Empire Co., which runs 1,600 stores under the Sobeys, Safeway, Freshco, IGA and Farm Boy banners, had its annual general meeting on Thursday. Empire's net income in the most recent quarter was little changed from a year earlier.
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"I am tired of these armchair quarterbacks who make little effort to understand even the basics of our business but are comfortable sitting on the sidelines pontificating about how Canadian companies are reaping unreasonable profits on the backs of inflation."
He said that this is not true. The attacks are meant to divide us, and sit in stark contrast to the collaboration and problem solving that we experienced during the worst part of the Pandemic.
The most aggressive attempt yet by anyone in the grocery business to push back against a summer of bad press that stirred resentment among customers and threatens to attract the attention of politicians who have shown a newfound interest in competition policy was made by Medline.
Canada's big grocers have faced backlash for posting profit gains as shoppers faced the highest grocery inflation since the 1980s. The criticisms have been dismissed by Empire and its competitors. That didn't stop the swirling accusations of corporate greed from turning into a public relations headaches for the industry, which was only just shaking off the Hero Pay scandal of 2020
David Macdonald is an economist at the Canadian Centre for Policy Alternatives. In July, a Toronto Star investigation concluded the same thing. The Financial Post worked with accounting and auditing experts to analyze financial statements from the top three grocers and found a more complex picture than the one drawn by Macdonald and the Star.
The scrutiny was being intensified by a number of politicians, media sources and think-tanks because they thought we were too successful in a high inflation environment. It makes for easy headlines and ignores what really drives our success. I won't apologize for our success.
Empire has said that its margin and earnings are getting better because of its three-year project horizon strategy to expand its Fresh Co and Farm Boy brands.
Empire reported a slight dip in profits in the first quarter despite a boost in sales.
Compared with the same period last year, sales increased. The jump came from higher food and fuel sales, which were influenced by this year's surge in commodity prices.
As household food bills climb higher and higher, more shoppers are looking for bargains at discount stores like Fresh Co. Statistics Canada found that grocery prices were up in July.
Empire had a profit of $187 million, down from $188 million a year ago. The earnings per share was lower than expected but still higher than the previous year. Despite Empire coming up short on earnings, Nattel said the results weresolid.
The company's margin was slightly slimmer in the quarter due to higher supply chain costs. Empire's gross margin fell to 24.9% from 25.1% last year. If fuel sales were excluded, the gross margin would be 63 basis points higher.
The email address is jedmiston@nationalpost.com.
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