Empire Company Limited

Q1 fiscal 27 EPS was $1.04, up 14.3% year over year, a record first-quarter result. Food sales grew 1.7% and same-store sales rose 1.2%; total e-commerce sales increased 11.3% year over year. Gross margin excluding fuel was essentially flat year over year, while SG&A excluding depreciation and amortization improved by 80 basis points. EBITDA was $712 million, up 6.1% year over year, and EBITDA margin was 8.4%, up 28 basis points year over year. The effective tax rate was 26.1% versus 26% last year. For fiscal 27, management expects gross margin expansion excluding fuel of 10 to 20 basis points, capital expenditures of approximately $850 million, and adjusted EPS growth at the high end of its 8% to 11% framework. It also continues to expect other income and share of earnings from equity investments of $90 million to $110 million for fiscal 27, with quarterly cadence expected to be about 15% in Q2, 20% in Q3, and 15% in Q4.

Pierre St-Laurent struck a constructive tone, saying the quarter showed disciplined execution, improving core operations, and progress on the company’s strategic priorities. He emphasized customer value, store expansion, growth, and cost efficiency, noting improving price perception and strong early results from recent store openings, including FreshCo expansion in Atlantic Canada. He also framed the current environment as a long-term opportunity, arguing Empire’s Canadian roots, supplier relationships, and banner mix position it well amid consumer value pressure and trade-related uncertainty.

Constantine Pefanis focused on the mechanics behind the quarter’s earnings improvement. He pointed to the $1.04 EPS, the 6.1% EBITDA increase to $712 million, and the 8.4% margin, saying SG&A excluding D&A improved by 80 basis points from lower incentive expenses, the pension settlement gain, and better cost efficiency, offset partly by investment in stores, tools, technology, and retail labor. He also said fiscal 27 capex should be about $850 million, roughly half for renovation and new-store expansion, with approximately 2 million shares repurchased for $95 million and Genstar sale proceeds of $71 million plus a $4 million gain. He reiterated the gross margin target of 10 to 20 basis points excluding fuel and said operating leverage should continue on an annual basis.

Analysts pressed management on softer same-store sales, competitive intensity, and whether tariff-related trade tensions could change consumer behavior or pricing. Management said promo intensity has been stable, customer behavior has not materially changed, and it is too early to call Q2 trends because of timing effects around Labor Day. On tariffs, management said there has been minimal business impact so far, few supplier cost-increase requests, and no intention to accept tariff-related price increases; they believe Empire’s assortment, especially in full service, gives customers options to avoid U.S. products.