Empire Company Ltd Q1 2022 Earnings Call Transcript

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

Question: Patricia A. Baker - Scotiabank Global Banking and Markets, Research Division - Analyst : I've got a couple of questions. First of all Michael for you. I'd really like to talk a little bit more about the progress that you made in Ontario with those market share gains that you shared with us. So obviously, Farm Boy plays a role here, Voila plays a role, Longo's, FreshCo 2.0. Those are big changes in the market in Ontario strategically that you've addressed, but can you also point to work that you've done on the brand and perhaps the early days with Horizon on store renovation and expansion, the seizure to the higher share at the organic Sobeys business in Ontario as well? 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 09, 2021 / 4:00PM, EMPa.TO - Q1 2022 Empire Company Ltd Earnings Call

Question: Patricia A. Baker - Scotiabank Global Banking and Markets, Research Division - Analyst : Okay. And then let me follow-up on that Michael, 2 quick things. So would it be fair to say that when we look at the whole project Horizon and that's all about -- not all about but a big part of that is driving further market share gain and driving the top line. So with respect to the important market of Ontario, you believe that the share gains that you've got are for the most part sustainable and that you actually see a path -- this is not the end game there's a path to further market share gain?

Question: Patricia A. Baker - Scotiabank Global Banking and Markets, Research Division - Analyst : Okay. Just want to follow-up on the point that you just made that you said the brand investments is paying off and maybe it's too early to tell, but I know that in the quarter, Sobeys was the sponsor of the Olympics. And I'm just curious, what the impact of that campaign was on your brand? Do you have any indication that that was a successful spend for you?

Question: Patricia A. Baker - Scotiabank Global Banking and Markets, Research Division - Analyst : Well, good luck to her. Mike, if I could just ask one more question for you. In the release, you indicated that a reference to the fact that Voila -- the metrics that Voila are going better than planned. Can you speak a bit to this? And then just, I'm sure as what how that experience with the Toronto CFC is informing your plans and expectations for what you're looking for out of Montreal?

Question: Patricia A. Baker - Scotiabank Global Banking and Markets, Research Division - Analyst : Yes. Yes.

Question: Vishal Shreedhar - National Bank Financial, Inc., Research Division - Analyst : Just with respect to the improvement that was -- that you've been noting for several quarters across the business, once upon a time for Empire, there was a perception that Quebec was the region maybe where Empire was the strongest, maybe the West, not the strongest. I'm wondering how all these regions stack up to one another? Now, is it more uniform, or do you still think there is disparity across the Company -- in the Company?

Question: Vishal Shreedhar - National Bank Financial, Inc., Research Division - Analyst : And in terms of the net promoter scores that you're seeing, is there a consistent improvement along with these numerous initiatives that you're implementing? And along with your comments that the West is substantially repaired from the state that you inherited in, are those net promoter scores improving as well?

Question: Vishal Shreedhar - National Bank Financial, Inc., Research Division - Analyst : And Empire has done a lot of work over the last few years at soaring up its market share in the GTA, and as you mentioned in your prepared comments, focus for the Company. Are you -- is the market share where you need it to be at these -- at -- with your multi-banner approach in the GTA? Or do you think there is still more work to be done there?

Question: Vishal Shreedhar - National Bank Financial, Inc., Research Division - Analyst : Okay. And maybe just a quick numbers question here. The gross margin pre-fuel up 40 bps was a good result in light of the unusual quarter you had last year. And there are lots of moving parts in there. There is Longo's, there is Project Horizon, there is this service counters coming back, maybe other factors, is it possible -- are you able to prioritize maybe what the major drivers were to that gross margin?

Question: Peter Sklar - BMO Capital Markets Equity Research - Analyst : On the -- for Voila, on the financial guidance you're providing, what you're saying is that you expect this year, fiscal '22 to be the peak dilution year. So I think that means you expect this year to be the peak year for losses from Voila in aggregate, and then the loss rate coming down in fiscal '23. So, how does that work? Because you've got the GTA CFC that should have less losses next year as you ramp it up, but on the other side of the ledger, you'll be in the peak of the losses of the Montreal facility as it begins to ramp and plus you'll be working on Calgary. So I just don't see how the arithmetic works for you to make that statement, unless you get a pretty dramatic ramp up in the financial performance of the GTA business. So, if you could just give us some flavor around that?

Question: Peter Sklar - BMO Capital Markets Equity Research - Analyst : And when did the Calgary costs start, Mike?

Question: Peter Sklar - BMO Capital Markets Equity Research - Analyst : And then just my last question on different topic. Michael, you brought up a couple of times in your discussion today about the promotional optimization and that's been one of the factors in your financial improvement. What are you talking about there? Are you saying that -- like, what is -- are you hiring more skilled merchants or using new analytical tools, or you've brought in consultants who are looking at demand elasticity? What actually is going on there? 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 09, 2021 / 4:00PM, EMPa.TO - Q1 2022 Empire Company Ltd Earnings Call