Empire Company Ltd Q4 2022 Earnings Call Transcript

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

Question: Vishal Shreedhar - National Bank Financial, Inc., Research Division - Analyst : I just want to get your perspective on what you saw intra-quarter as the trends improved and how they improved and for what reasons? I know you mentioned that in your script, so if you can provide some additional color.

Question: Vishal Shreedhar - National Bank Financial, Inc., Research Division - Analyst : Yes. I just want to follow up on management's comments about expectations for positive same-store sales growth in fiscal '23. And what underpins that assumption? And to what degree will Scene+ play a role in that expectation?

Question: Vishal Shreedhar - National Bank Financial, Inc., Research Division - Analyst : Okay. And lastly, I was hoping to get your perspective on gross margin, up 17 basis points, excluding fuel. If you remove the strike impact up even more year-over-year, quite a solid result given all the inflationary pressure, but top line is a little bit lower than at least I expected on same-store. Wondering if management is satisfied with the balance between gross margin and sales or if there's any fine-tune adjustments to be made there?

Question: Patricia A. Baker - Scotiabank Global Banking and Markets, Research Division - Analyst : I'd like to resume discussion, Michael, on the Scene+. You guys certainly negotiated a very good deal to say the least. Can you share with us some of the discussions that you have with the partners and what they were split other than what you already told us, but anything else you can share about what saw such a coveted partner? And then also on Scene+, do you think that it's a little -- a bit of an advantage right now that you're going to be rolling that out in August to the maritime, which is probably one of the more struggling parts of the country and doing it in the context of inflation and that would make those Scene points look very value-oriented for those customers to really want to redeem the points for food when food prices are so high.

Question: Patricia A. Baker - Scotiabank Global Banking and Markets, Research Division - Analyst : So, Michael, you'll be able to personalize message to those 40% of the Scene+ members who we don't already shop at Sobey's?

Question: Patricia A. Baker - Scotiabank Global Banking and Markets, Research Division - Analyst : And then do you have anything to say about my last comment about while it's fortuitous to be doing it at a time when there's high inflation, that makes the point to be even that much more attractive.

Question: Peter Sklar - BMO Capital Markets Equity Research - Analyst : Michael, a question on the new loyalty program, which I can see management is very excited about. So like you're going to lose Air Miles customers who are not Scene members and you're going to pick up Scene customers who are not currently Air Miles, currently don't hold Air Miles. And so net-net, like why is your management and you so optimistic that you're going to be so far ahead at the end of the day? Is it like it seems to me that you're substituting one loyalty program for another, but you're just so optimistic that the net impact is going to be so positive.

Question: Peter Sklar - BMO Capital Markets Equity Research - Analyst : Yes. But Michael, how do you know that you can convert almost all of your existing Air Mile customers to take on a Scene -- to take up the Scene loyalty program and be active on it? Like is it -- I would think there'd be some meaningful proportion that I'm loyal to Air Miles. So I'm going to stick with my Air Miles.

Question: Peter Sklar - BMO Capital Markets Equity Research - Analyst : Okay. And I just had one final question on a different topic. I don't know if you saw, I'm sure you saw that [Cato] in their recent revised guidance, they said that consumers are putting one or 2 fewer items in the basket. And so there's some kind of online phenomena going on in the U.K., I guess, is the consumer squeeze by high cost of moving inflation. When you look at Voila, are you seeing anything like that? Or even in your in-store like even in your in-store, are you seeing fewer items in the basket? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 22, 2022 / 3:30PM, EMPa.TO - Q4 2022 Empire Company Ltd Earnings Call

Question: Vishal Shreedhar - National Bank Financial, Inc., Research Division - Analyst : Just a quick follow-up. CapEx seems to be trending above the $300 million to $700 million target indicated. I was hoping you can give us some color on that extra spend and if your capital investments are generating the desired rate of return.

Question: Vishal Shreedhar - National Bank Financial, Inc., Research Division - Analyst : Okay. So past fiscal '23, is there -- is the $800 million number a more sticky number I should consider for Empire's CapEx on an ongoing basis?