Inflation may have peaked in Canadian grocery stores as price increases by food manufacturers stabilize, the Empire Company chief executive observed Thursday.
“Although it is too early to say with certainty that inflation has peaked, we are seeing encouraging signs, including the fact that the number and rate of cost increases from our suppliers are decreasing,” explained Michael Medline, chairman and CEO of Sobeys and its parent company, Empire, on a conference call with analysts.
“We started to get a little more confident about it about three or four weeks ago. »
In July, Loblaw Companies Chairman and President Galen G. Weston said there were early signs of slowing inflation as commodity and transportation costs rise. were improving.
But he added that supplier costs remained high, putting sustained pressure on retail prices.
However, now that Sobeys sees supplier costs stabilizing, shoppers may soon be relieved of relentless price hikes at the grocery store.
Even so, inflation should continue to shape the buying habits of consumers looking to save money.
Empire is seeing some shoppers turn to lower-priced groceries, Medline noted. “FreshCo is performing very well and posting the best results in its history,” he underlined.
The food retailer’s full-service stores are also doing well, as the company’s private labels and promotions attract value-seeking customers, Medline said.
“Our private label portfolio (is doing very well) and provides immense value to customers,” he continued, adding that sales of the grocer’s private label brands, such as Compliments, were up 9.5% d year over year in the most recent quarter.
Empire posted a first-quarter profit of $187.5 million on Thursday, as sales rose 4.1% from a year ago.
Its earnings per share were 71 cents per share for the quarter ended Aug. 6. That result compares to earnings of $188.5 million, or 70 cents per share, a year ago when more shares were outstanding.
Sales totaled $7.94 billion, compared to $7.63 billion in the same quarter last year.
Empire attributed the revenue growth to higher fuel sales, higher food inflation and benefits from recent initiatives, including the expansion of its FreshCo brand in Western Canada. These items were partially offset by the impact of the pandemic restrictions in place for part of the first quarter of the prior year.
Sales at stores open for at least a year rose 3.3% in the most recent quarter. Excluding fuel sales, this increase was 0.4%.