The following is excerpted from the question-and-answer section of the transcript.
(Questions from industry analysts are provided in full, but answers are omitted - download the transcript to see the full question-and-answer session)
Question: Patricia A. Baker - Scotiabank Global Banking and Markets, Research Division - Analyst
: I have a few questions. So Michael, thank you for giving us the data on the own brand performance in the quarter, up 9.5%. And I just want to
square that 9.5% trend, which was 0.4% same-store sales. And presumably, the own brands was accretive to margin. But of course, it does hurt
your retailers. So if we try to look at this on a different basis and instead of looking at that same-store sales. With that high growth in the private
Question: Patricia A. Baker - Scotiabank Global Banking and Markets, Research Division - Analyst
: Okay. So let me ask it a slightly different way. So that 9.5% growth in private label or owned brands. So does that reflect new customers coming to
private label? Does it reflect customers shifting from national brands, which on average have -- an average -- higher average retail price, right, and
shifting to private label, which would have an implication for your basket dollars?
Question: Patricia A. Baker - Scotiabank Global Banking and Markets, Research Division - Analyst
: Okay. That sounds clear. So I'm going to ask about something that we never -- I don't think it's been a long time since it's been discussed on an
Empire conference call. And that is what sort of trends are you seeing with your drugstore business? You've got a total of about 400 drugstores
across the country. So are you seeing any interesting trends there over the course of the last several quarters?
Question: Patricia A. Baker - Scotiabank Global Banking and Markets, Research Division - Analyst
: And then Michael, okay. You mentioned in your remarks that the supplier discussions are changing and you're not getting as much in the way of
asks for cost increases. When did you first start to see that? And how comfortable are you that, that we really are going to see that abate and that
will be positive for the business?
Question: Patricia A. Baker - Scotiabank Global Banking and Markets, Research Division - Analyst
: Okay. And I'm going to ask one last question, and that is just on this all discussion and the other questions previously that were asked on the
e-commerce trends. And it's perfectly understandable why the industry is down currently. Do you have any -- your own views or broad views out
there about what the longer-term trends are for online grocery delivery in the Canadian marketplace? I'm not talking about the next year or the
next quarter, but longer term.
Question: Vishal Shreedhar - National Bank Financial, Inc., Research Division - Analyst
: Once upon a time, Michael, Empire's business was more bifurcated and the Quebec region tended to react more quickly to all these quick rapid
changes in consumer demand in the market and how the consumer is behaving. So just wondering now when you look at this business, is it more
uniform in terms of how it's responding to these rapid changes in consumer demand? I'm talking about the increased price sensitivity and increased
demand for value.
Question: Vishal Shreedhar - National Bank Financial, Inc., Research Division - Analyst
: And on that point, just extending it. So you have these businesses Farm Boy, Longo's, very entrepreneurial and historically had to be more dynamic
to compete against the big guys. Wondering if those businesses are responding differently to these challenges and how they're addressing the
consumer and if there are any conversations going back and forth to take back best practices?
Question: Vishal Shreedhar - National Bank Financial, Inc., Research Division - Analyst
: Okay. And that leads me to my question, which I think you've answered is, just given the shift to -- this incremental shift towards discount management
is still satisfied with the returns and hitting the thresholds that it aimed for with Farm Boy and Longo's at this point?
Question: Peter Sklar - BMO Capital Markets Equity Research - Analyst
: Just one question. So -- the other day, I'm sure you saw that Ocado discussed their retail sales decline, and they talked about it in terms of the
impact of food inflation, the number of items in the basket, trade down to house brands, a number of customer transactions. So wondering, can
you provide some flavor on Ocado's 21% decline in revenue? Kind of talk about the moving parts sort of in the same context.
Question: Peter Sklar - BMO Capital Markets Equity Research - Analyst
: Yes. Well, I thought that the thing that was disconcerting in their disclosure is that their basket count. So a number of items in the basket was down
10%. Are you saying you're not seeing anything that severe?
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