Sobeys parent company Empire posts massive $942.6M net loss in 4th quarter

Empire Company Ltd., parent of the Sobeys supermarket chain, has reported a massive fourth-quarter net loss of more than $900 million, citing challenges related to its Canada Safeway acquisition in Western Canada.

The company reported a loss of $942.6 million or $3.47 per diluted share, compared with a net profit of $55.4 million or 20 cents per share in last year's fourth quarter.

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That contributed to a consolidated net loss for all of fiscal 2016 of $2.13 billion or $7.78 per diluted share, compared with net income of $419 million or $1.51 per diluted share in fiscal 2015.

The company's class-A non-voting shareslost 11 per cent of theirvalue on the Toronto Stock ExchangeWednesday and weredown another 2.9 per cent in mid-morning trading Thursday, to stand at $18.79.

Empire said in its earnings release issued Tuesday after markets closed that integration of the Safeway operations was a driving factor behind the red ink.

"In addition, increased promotional activity and a difficult economic environment mainly in the Alberta and Saskatchewan markets, resulted in sales, gross margin and earnings erosion in the West business unit."

Sales for the quarter were $6.28 billion, up $512.7 million or 8.9 per cent from $5.77 billion, helped by an extra week in the quarter compared with 2015 that added about $461.2 million.

Same-store sales down 1.8%

Same-store sales at shops open for more than a year, an important metric in retail, decreased 1.8 per cent. However, excluding the negative impact of fuel sales and the retail West business unit, same-store sales would have increased 0.2 per cent, Empire said.

Adjusted net earnings for the quarter were $95.3 million or 35 cents per diluted share, down from $136.7 million or 49 cents in the year earlier period.

Full-year sales, covering a 53-week period versus 52 weeks in fiscal 2015, were $24.618 billion, up $690 million or 2.9 per cent.