Empire Company (EMP-A) Q1 2025 earnings summary

Executive summary

• Fiscal 2025 began with positive momentum, disciplined execution, and operational efficiency, resulting in consistent earnings growth and improved same-store sales performance, with Q1 same-store sales (excluding fuel) up 1.0% on top of 4.1% growth in Q1 F24.

• Adjusted net earnings rose to $218.7M ($0.90 EPS) from $196.2M ($0.78 EPS) year-over-year, while reported EPS was $0.86 after adjustments for e-commerce impairment and restructuring.

• Voilà e-commerce sales grew 26.2% year-over-year, marking the fourth consecutive quarter of double-digit growth, and the company ended its mutual exclusivity with Ocado, incurring a non-cash pre-tax charge of $11.9 million.

• Issued the 2024 Sustainability Business Report, highlighting ESG progress, including a 27% reduction in Scope 1 and 2 GHG emissions and 30M lbs of food donated.

• Strategic focus remains on store renovations, digital/data initiatives, and cost control, with the pause of the fourth Voilà CFC to optimize e-commerce performance.

Financial highlights

• Sales excluding fuel grew 1.3% year-over-year to $8,137 million, with same-store sales up 1%, and gross profit rose 2.5% to $2,126.3M.

• Adjusted EPS reached a record $0.90, up from $0.78 last year; reported EPS was $0.86 after adjustments.

• Gross margin rate (excluding fuel) expanded by 46 basis points year-over-year to 26.1%, outperforming the medium-term target.

• Adjusted EBITDA rose to $659 million (margin 8.1%), compared to $641 million (margin 7.9%) a year ago.

• Free cash flow was $186 million, down from $340 million in Q1 F24; capital expenditures were $152 million.

Outlook and guidance

• Fiscal 2025 capital expenditures expected at ~$700M, with about half allocated to store renovations and new store expansion, and 25% for IT/business development.

• Management targets long-term adjusted EPS growth in line with the average annual range of 8–11%, supported by net earnings and share repurchases.

• Aggregate pre-tax earnings from other income plus share of earnings from investments expected between $135M and $155M in fiscal 2025.

• Effective income tax rate for fiscal 2025 is estimated at 25–27%, excluding unusual transactions.

• On track to renovate 20–25% of the network between F24 and F26.