Empire Company Ltd Q1 2021 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Peter Sklar - BMO Capital Markets Equity Research - Analyst : Okay. I believe you said that you're going to be spending 15% of your CapEx on advanced analytics. That is a lot. Can you elaborate a little bit about where -- how you're spending that money? What you're spending it on? And like, I assume you have an advanced analytics team or you're developing a team. And how do you recruit and find those people? Because it just seems like every retailer is talking about analytics now. So maybe just talk a little bit about that. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 10, 2020 / 4:00PM, EMPa.TO - Q1 2021 Empire Company Ltd Earnings Call

Question: Peter Sklar - BMO Capital Markets Equity Research - Analyst : Okay. And then the other area I would ask if you address. Can you talk a little bit about like all these store conversions and new stores you're doing? So for example, there's the FreshCo conversions out West, and then there's the Farm Boy expansion in Ontario. Can you talk a little bit about like how those stores perform and what the ramp looks like? And over what period of time, do they lose money? And how long does it take before they generate the sales level and returns you're looking for?

Question: Peter Sklar - BMO Capital Markets Equity Research - Analyst : And Mike, when you do these conversions, how does that get incorporated into the same-store sales numbers that you provide? I assume when a store is closed for conversion that comes out of the calculation. And when does it come back in? I assume not on the day 1 of launch. You wait 13 months or whatever.

Question: Patricia A. Baker - Scotiabank Global Banking and Markets, Research Division - Analyst : Michael, I just want to come back to Voila for a second. So you market that offering as Voila by Sobeys. And I'm just -- it's probably too early to tell yet, but I'm just wondering whether you foresee that Voila itself is actually going to provide some halo effect to the Sobeys stores? And then, secondly, some enhancement or strengthening of the Sobeys name and the Sobeys brand?

Question: Patricia A. Baker - Scotiabank Global Banking and Markets, Research Division - Analyst : Okay. That's very helpful. Then in your opening remarks, you did talk about the renovations as being one of the key drivers to drive market share. And you noted that those are the highest-return projects in the company. I think you mentioned that you've got 21 underway currently. Just curious, of those 21, are those geographically dispersed or geographically concentrated?

Question: Patricia A. Baker - Scotiabank Global Banking and Markets, Research Division - Analyst : Okay. And the curbside pickup in Nova Scotia, can you -- 2 things. When you were -- in the opening remarks, talked about the curbside pickup in Nova Scotia, and then you said you'll be -- then you'll be going out West. So I'm assuming that curbside pickup in Nova Scotia is being done because that's a market where you'll never have a CFC and the West is referring to you doing your B option, which is seeding curbside pickup before you put in a CFC. Is that correct? And then, secondly, how many locations are you doing it in Nova Scotia? And is it both in urban and more rural markets? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 10, 2020 / 4:00PM, EMPa.TO - Q1 2021 Empire Company Ltd Earnings Call

Question: Patricia A. Baker - Scotiabank Global Banking and Markets, Research Division - Analyst : Okay. That's very helpful. And my last question is just a clarification. You talked about Farm Boy and how that their same-store sales were down because of the removal of the foodservice, et cetera. But you said that their sales are now stronger than normal. I just want to make sure that what you're saying is that Farm Boy is now seeing same-store sales that are stronger than they've even had in their history?

Question: Patricia A. Baker - Scotiabank Global Banking and Markets, Research Division - Analyst : Well, since you have...

Question: Vishal Shreedhar - National Bank Financial, Inc., Research Division - Analyst : Michael, I know you're very focused on return on capital. And when the Farm Boy acquisition was announced initially, there was some surprise that the actual multiple number. Just wondering as you reflect back on Farm Boy, if that acquisition is hitting your hurdle rate? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 10, 2020 / 4:00PM, EMPa.TO - Q1 2021 Empire Company Ltd Earnings Call

Question: Vishal Shreedhar - National Bank Financial, Inc., Research Division - Analyst : Okay. And I know that Farm Boy merchandise is being offered by Voila, but has any of their thoughts regarding merchandising -- does any of that percolated back into the Sobeys network? And are you seeing any of these kind of reverse synergies flow across the Asda network?

Question: Vishal Shreedhar - National Bank Financial, Inc., Research Division - Analyst : Hello?

Question: Vishal Shreedhar - National Bank Financial, Inc., Research Division - Analyst : I am.

Question: Vishal Shreedhar - National Bank Financial, Inc., Research Division - Analyst : Sorry, it just cut out again. I know you said something but I missed it.

Question: Vishal Shreedhar - National Bank Financial, Inc., Research Division - Analyst : Okay. And just switching topics here. On Voila, I'm not sure you're able to provide us with specific detail, but even high level detail on basket size, margin composition, promo intensity. Any of that color is in line with what you thought? And maybe if you can reference your store network and how it compares?

Question: Vishal Shreedhar - National Bank Financial, Inc., Research Division - Analyst : Okay. And maybe I'll risk asking another question here just in terms of Voila. Is there -- is the amount of 2-hour orders, let's say, is that in line with what you thought it would be and it's a rather small percentage and the vast majority have like 24-hour orders? Is that a fair way of thinking about it?

Question: Vishal Shreedhar - National Bank Financial, Inc., Research Division - Analyst : Yes. I said short-dated 2-hour orders, let's say. Is that a small percentage of the orders? And then the 24-hour window for an order, is that like the vast bulk of the orders?