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Empire Co. post higher profit as belt tightening offsets difficult retail landscape

Sobey store in Calgary, Alberta, June 13, 2013.

Todd Korol/The Globe and Mail

Empire Company Ltd. (TSX: EMP.A), parent of the Sobeys Inc. grocery chain, says its second quarter profit rose to $169.2-million from $91.9-million a year ago as cost containment helped offset challenges stemming from the competitive retail landscape.

The consolidated net earnings, which included earnings from discontinued operations, equalled $2.48 per diluted share and compared to $1.35 per diluted share in the second quarter last year.

Adjusted net earnings from continuing operations were $78.1-million or $1.15 per diluted share, compared to $82.7-million or $1.21 per diluted share in the year-ago period. Sales rose to $4.43-billion for the quarter ended Nov. 2, from $4.35-billion.

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During the second quarter, Sobeys reported sales of $4.42-billion, an increase of $86.4-million or two per cent from $4.33-billion.

Sobeys contributed net earnings to Empire of $56.3-million compared to $83.4-million in the second quarter last year.

The Nova Scotia-based company said the decrease was largely due to lower gross profit, transaction and finance costs related to Empire's acquisition of Canada Safeway, which was completed after the end of the quarter, and lower gains on the disposal of assets compared to the prior year.

Before the end of the quarter, Empire completed the sale of 46 movie theatres to Cineplex Inc. and Landmark Cinemas by its Empire Theatres division, a deal that had been announced in June.

"In the second quarter, we achieved same-store sales growth in an environment which remains very competitive," said chief executive Marc Poulin.

"Although the current market dynamic did impact our overall gross margin, the impact on our adjusted net earnings was largely offset as a result of operating cost control."

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