Empire plans $2.1B grocery-store spend
The parent company of several major grocery chains says it will spend $2.1 billion over the next three years to build and renovate stores and expand its e-commerce offering.
Empire Company Limited, which owns Sobey’s, Safeway, FreschCo and Farm Boy, announced a three-year growth strategy on July 22 that aims to deliver annualized earnings of at least $500 million. Its plan is forced on growing its market share, and building on the cost efficiencies the company realized over the course of its previous three-year plan. Over the course of that exercise, the Stellarton, Nova-Scotia based company was able to realize $550 million in savings.
“Empire now has the team, the structure and the vision to achieve its sales and earnings potential,” said Empire president and CEO Michael Medline. “As the retail landscape in Canada continues to react and shift under the seismic waves caused by the pandemic it is clear now, more than ever, that we must be able to serve customers where, when and how they want to shop. We will invest in our core store business to drive growth and will move much faster with customer fulfillment centres and a new store-pick solution.”
Its Project Horizon plan for the next three years will see the company spend $700 million annually on its capital program to build out and renovate stores under the Farm Boy banner in Ontario and FreshCo in Western Canada. The program will see the firm build 20 new Farm Boy locations in Ontario and convert as many as 35 stores to FreshCo in Western Canada.
Empire forecasts that its capital spend for fiscal 2021 will be between $650 and $675 million—about half of which will be spend on renovations and new construction. Empire will open approximately 15 FreshCo stores in Western Canada and expand the Farm Boy footprint by eight stores in Ontario.
Empire also expects that a strategic alliance with British firm online grocery retailer Ocado will yield further benefits. The firms will partner to build four robotics fulfilment centres in Canada. The first, in the Greater Toronto Area opened in June, while a second in Montreal is under construction. That facility is expected to start operations in 2022. Construction of two other fulfilment centres, in Western Canada, is being accelerated.
Finally, at the end of the summer, Empire is planning to implement and test a store pick solution. Powered by Ocado technology, the solution will be pilot tested in Nova Scotia before being expanded across the country over the next few years.