Sobeys is to buy Safeways Canadian business for cash price of C$5.8bn

Sobeys is to buy Safeway's Canadian business for cash price of C$5.8bn

Canadian grocer Sobeys saw sales and profits increase in its last financial year, the company's owner, Empire Co., reported today (27 June).

Empire said Sobeys put in a "solid" performance in the year to 4 May, with same-store sales at the supermarket group up 1.3%.

Total sales increased to C$17.61bn (US$16.81bn), up 8.4%. Excluding the acquisition of 236 retail gas locations and related convenience store operations in the period, sales were up 2.9%.

Adjusted EBITDA rose to $921.7m, versus $856.2m last year. Net earnings, net of non-controlling interest, totalled $384.8m, compared to $339.4m in the prior year period.

Earlier this month, Sobeys struck a deal to buy the Canadian assets of US retailer Safeway Inc.

Empire said today its acquisition of Safeway's Canadian estate will allow the group to drive growth by leveraging Sobeys existing asset base.

Empire president and CEO Paul Sobey said: "We are energized by our June 12th announcement to acquire substantially all of the assets of Canada Safeway. This acquisition represents a highly strategic opportunity for Sobeys to leverage its existing asset base and effectively create a new platform for growth."

Separately, Empire said it will sell 24 of its Atlantic Canadian Empire Theatres to Cineplex. The group indicated the move is in line with its strategic drive to focus on its food retail business. 

Click here for our analysis of Sobeys' deal to buy Safeway's Canadian business.

Show the press release

Empire Company Reports Fourth Quarter and Full Year Results

STELLARTON, NS, June 27, 2013 /CNW/ - Empire Company Limited (TSX: EMP.A) today announced financial results for its fourth quarter and fiscal year ended May 4, 2013. For the fourth quarter, the Company recorded net earnings, net of non-controlling interest, of $107.4 million ($1.58 per diluted share) compared to $92.1 million ($1.35 per diluted share) in the fourth quarter last year. Adjusted net earnings, net of non-controlling interest, in the fourth quarter were $98.6 million ($1.45 per diluted share) compared to $89.6 million ($1.32 per diluted share) in the fourth quarter last year, a $9.0 million increase.

Fourth Quarter Highlights

Sales of $4.31 billion, up $235.1 million or 5.8 percent (up 2.4 percent excluding the impact of the acquisition of 236 retail gas locations and related convenience store operations). Sobeys' same-store sales increased 0.6 percent. Adjusted EBITDA (1) of $235.9 million versus $222.2 million last year. Net earnings, net of non-controlling interest, of $107.4 million ($1.58 per diluted share) compared to $92.1 million ($1.35 per diluted share) last year. Adjusted net earnings (1), net of non-controlling interest, of $98.6 million ($1.45 per diluted share) versus $89.6 million ($1.32 per diluted share) last year. Funded debt to total capital ratio of 20.6 percent compared to 25.0 percent last year. Free cash flow reported by Sobeys of $131.0 million.
(1) Excludes items which are considered not indicative of underlying business operating performance.

Net earnings, net of non-controlling interest, for the 52 weeks ended May 4, 2013 were $384.8 million ($5.65 per diluted share) compared to $339.4 million ($4.99 per diluted share) recorded last fiscal year. Adjusted net earnings, net of non-controlling interest, for the fiscal year ended May 4, 2013 were $367.3 million ($5.39 per diluted share) compared to $322.7 million ($4.74 per diluted share) for the 52 weeks ended May 5, 2012, a $44.6 million increase.

Fiscal 2013 Highlights

Sales of $17.61 billion, up $1,363.6 million or 8.4 percent (up 2.9 percent excluding the impact of the acquisition of 236 retail gas locations and related convenience store operations). Sobeys' same-store sales increased 1.3 percent. Adjusted EBITDA (1) of $921.7 million versus $856.2 million last year. Net earnings, net of non-controlling interest, of $384.8 million ($5.65 per diluted share) compared to $339.4 million ($4.99 per diluted share) last year. Adjusted net earnings (1), net of non-controlling interest, of $367.3 million ($5.39 per diluted share) versus $322.7 million ($4.74 per diluted share) last year. Free cash flow reported by Sobeys of $317.6 million.

(1) Excludes items which are considered not indicative of underlying business operating performance.

"We are pleased with our fourth quarter and full year financial results which reflect the continued solid performance of Sobeys and our related real estate businesses," said Paul Sobey, President and CEO of Empire Company Limited. "We are also energized by our June 12th announcement to acquire substantially all of the assets of Canada Safeway. This acquisition represents a highly strategic opportunity for Sobeys to leverage its existing asset base and effectively create a new platform for growth."
"Our improved financial performance as well as the opportunity to acquire Canada Safeway would not have been possible without the quality and depth of talent that exists in our organization. On behalf of management and our Board, we would like to thank our employees, franchisees and affiliates for their hard work and dedication as their efforts have allowed us to capitalize on this exciting opportunity. Their commitment to execute our strategy and provide our customers with a high quality offering, with excellence in fresh food supported by great service, continues to be a long term strategic advantage for the Company.
"Consistent with our growth and the improvement in our financial position, we are pleased to announce an increase in Empire's quarterly dividend per share, from 24.0 cents per share to 26.0 cents per share, an 8.3 percent increase. This marks the eighteenth consecutive year of Empire dividend increases."

Original source: Empire Co.