Empire Company Limited

Empire reported adjusted EPS of $0.69 in Q2, down $0.04 from last year on a reported basis. Excluding other income and share of earnings from equity investments, core adjusted EPS grew 12.5% year over year. Food same-store sales increased 2.5%, total food sales grew 3.4%, and gross margin excluding fuel improved 14 basis points; management said the improvement would have been more than 20 basis points excluding the wholesale mix impact. Real estate-related contribution was $31 million lower year over year, and management said that shortfall will be made up in the second half. For fiscal 2026, Empire maintained real estate-related income guidance at the lower end of its $120 million to $140 million range, expects the quarterly cadence to be 23% in Q3 and 35% in Q4, remains on pace for $850 million of CapEx, and expects to complete its $400 million buyback plan.

Pierre St-Laurent struck an upbeat but disciplined tone, calling Empire “in excellent shape” and emphasizing that the company has meaningful opportunities ahead. He said his near-term priority is to capture the full value of prior investments in stores, technology, and strategic projects, while the refreshed longer-term plan will center on customers, stores, growth, and cost control. He also framed the business as increasingly multichannel, saying e-commerce should be viewed that way rather than as a single-channel Voilà strategy, and he stressed profitable growth rather than growth for its own sake.

Consta Pefanis focused on the underlying financial improvement versus the headline EPS decline, noting that real estate-related earnings were $31 million lower and obscured 12.5% core adjusted EPS growth. He highlighted 2.5% same-store sales, 3.4% total food sales growth, 14 basis points of gross margin expansion excluding fuel, and SG&A growth of 4.6% with a 34 basis point rate increase driven by investments, labor costs, and one-time items. On capital allocation, he said Q2 CapEx was $205 million, fiscal 2026 CapEx should be about $850 million, the company expects to finish its $400 million buyback authorization, and it issued a $300 million 3-year note at a fixed rate of 3.1%.

Analysts pressed management on whether Pierre St-Laurent would change strategy as CEO, and he said the short-term focus is extracting more value from prior investments while staying disciplined on cost. A key topic was Voilà and e-commerce profitability: management said the business is improving on a comparable basis, that the strategy is now more multichannel, and that ending Ocado exclusivity and adding third-party partnerships has not caused cannibalization. Analysts also asked about competition, gross margin durability, and SG&A leverage; management said promotional intensity is manageable, gross margin gains come from many small operational initiatives, and they are still working to bring SG&A growth below sales growth over time.