Empire Company Ltd Q3 2021 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 : Michael, I'd like to talk a little bit more on the promotional optimization. I mean, certainly provided you with a win in Q4, and it sounds like it's going to be a gift that keeps on giving. So the way that I look at it here, there's 2 elements. There's the data and the analysis of that data. And then, of course, as you referred to in your opening remarks, there's the teams that work with those tools to deliver the promotional effectiveness. Now the data has always been there. So as I recall when you first joined the company, you said you were really impressed by the amount of data. So obviously, what -- part of what's happening here is that the mining of the data has improved significantly. But I just want to get your impression. If you look at the teams that are managing the promotion and as you indicated also using their judgment. Does the results that we saw in Q3 demonstrates that the teams are as agile as you want them to be? Or -- and how would you compare them to where they were a year ago? And REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 10, 2021 / 5:30PM, EMPa.TO - Q3 2021 Empire Company Ltd Earnings Call then or is there more to come? And does the successful promotion should build on the next promotion so that you just keep getting better and better?

Question: Patricia A. Baker - Scotiabank Global Banking and Markets, Research Division - Analyst : No. Absolutely. You mentioned that the merchants embrace this, and they're speaking a different language. I'm just curious, are they speaking a more return-oriented language than they would have been a year or 2 ago?

Question: Vishal Shreedhar - National Bank Financial, Inc., Research Division - Analyst : Just to paint the same wall here and going back to gross margins. Obviously, we don't see that kind of performance on a regular basis in that sector. So with respect to the initiatives that you've implemented, wondering if you've had any customer feedback on kind of the movements that you've made on your promotion. Are you seeing any changes on Net Promoter Score one way or the other to kind of gauge the customer's reception to these initiatives? Pierre St-Laurent - Empire Company Limited - Executive VP & COO - Full Service That's a good question. I think, once again, the best indicator for us is market share. That means the thing we are doing are meaningful for customers. We're monitoring price perception, and we're seeing a positive movement. So I think, overall, the feedback -- so it's tough to -- a customer to -- they don't have the data we have, to build a meaningful promotion, but their perception remain strong, and we're seeing slight improvement. But the right -- the real KPI, once again, it's the market share. So -- and we're seeing good results in Q3, but it's not new. In Q2, we've got good results also on margin. And so it's just a continuous improvement. We accelerated both margin and market share gain in Q3. So it's not something new in Q3. It's just a continuous improvement on what we're working on since a year or 2. And we're at early stage of Horizon. So we're expecting a continuous improvement again.

Question: Vishal Shreedhar - National Bank Financial, Inc., Research Division - Analyst : Yes. And as you reflect on that -- on the pandemic and potential lasting changes to the consumer, I'm wondering if you can talk about your real estate strategy and if you foresee any changes, perhaps more suburban, perhaps lower real estate costs in urban centers that make those regions more appealing? Is there any insights that you can share? Or is it business as usual?

Question: Peter Sklar - BMO Capital Markets Equity Research - Analyst : Just a couple of questions left. Michael, first of all, like it's no secret that Loblaw was more aggressive on price -- on the discount side. So I'm just wondering from your perspective, like, do you feel that pressure? And do you have to adjust your promotional direction? Or is it just the shift is on automatic pilot, and you just sailed through it, which is kind of noise in the backdrop?

Question: Peter Sklar - BMO Capital Markets Equity Research - Analyst : Okay. The other thing I wanted to ask you about, if I could just challenge you on one thing is, like you know how some of your competitors have been demanding additional price from the supply base, and Empire is not -- like you're taking a more, I don't know what to call it, responsible or business like relationship with your suppliers. But like if you look at Project Sunrise. And like the category reset would have incorporated suppliers ahead. So like in that context, didn't you go back to suppliers and asked for price? So I'm just wondering how -- what your thoughts are when I put it to you that way. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 10, 2021 / 5:30PM, EMPa.TO - Q3 2021 Empire Company Ltd Earnings Call

Question: Peter Sklar - BMO Capital Markets Equity Research - Analyst : Well, you're saying that unlike your competitors that like you're not demanding price from your suppliers. Like you're not demanding a 2% price across the board. You're being much more responsible. But what I'm challenging you on as part of Project Sunrise, though, I would have thought you would have gone for some pretty aggressive price from your suppliers. So isn't it true you really did have a go at your suppliers? Just wondering like what your comment is when I put it to you that way.