Empire Company Limited

Empire reported Q2 adjusted EPS of $0.69, down $0.04 year over year. Excluding other income and share of earnings from equity investments, core adjusted EPS grew 12.5% versus last year. Food same-store sales increased 2.5%, total food sales rose 3.4%, and gross margin excluding fuel improved 14 basis points; excluding the wholesale mix impact, gross margin improvement would have been more than 20 basis points. SG&A excluding D&A grew 4.6% and the SG&A rate rose 34 basis points. Real-estate-related contribution was $31 million lower year over year, and management maintained guidance for that income at the low end of $120 million to $140 million, with 23% expected in Q3 and 35% in Q4. Q2 CapEx was $205 million; full-year CapEx is still expected to be $850 million, and the company expects to complete its $400 million buyback plan, with 3.7 million shares repurchased for about $195 million so far. Management also said it issued a $300 million 3-year note at 3.1%.

Pierre St-Laurent’s message was one of continuity with a sharper emphasis on execution, discipline, and extracting more value from past investments. He said Empire is in excellent shape, highlighted collaboration across the business, and framed his priorities around customers, stores, growth, and cost control. He repeatedly emphasized profitable growth, better cost discipline, and leveraging the company’s multi-banner footprint and assets more effectively.

Consta Pefanis focused on the earnings bridge and cash deployment. He said the $31 million year-over-year decline in real-estate-related income explained most of the gap in reported EPS, while the core business still delivered 12.5% adjusted EPS growth. He also noted gross margin expansion of 14 basis points excluding fuel, SG&A growth of 4.6%, Q2 CapEx of $205 million, a full-year CapEx plan of $850 million, and the company’s intent to complete the $400 million buyback. He added that the new $300 million, 3-year note at 3.1% was well received and that the effective tax rate was 26.4% in Q2, with a fiscal 2026 expected range of 25% to 27%.

Analysts focused on the new CEO’s priorities, the future of Voilà/e-commerce, competition, SG&A leverage, gross margin sustainability, store conversions, and the use of assets like wholesale and retail media. Management said Voilà is improving on a comparable basis, that e-commerce is now being approached as a multichannel business rather than a single-channel bet, and that there has been no cannibalization from third-party partnerships. They also said wholesale is using existing capacity and is a useful low-SG&A way to leverage assets, while SG&A should benefit over time from converting investments into operating leverage, though they gave no precise timeline.