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Tag: retail stocks

  • Sobeys/FreshCo parent company, Empire reports earnings – MoneySense

    Sobeys/FreshCo parent company, Empire reports earnings – MoneySense

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    Growing grocery delivery business and other opportunities

    The company also said it’s hitting pause on a new fulfilment centre to help save costs in its grocery delivery business Voilà, among other changes. 

    “While the market penetration of Voilà continues to be strong, the size and growth of the Canadian grocery e-commerce market is smaller than anticipated, resulting in higher net earnings dilution than originally estimated,” Empire said in its press release. The company says it’s focusing on driving volume and performance at its three existing centres. 

    Empire also prematurely ended its mutual exclusivity agreement with technology provider Ocado, as part of changes it’s made to lower costs and increase flexibility. The changes “are expected to have a significant, positive impact on Voilà’s profitability in fiscal 2025 and 2026,” Empire said.
    The company says its profit amounted to $0.86 per diluted share for the 13-week period ended Aug. 3.

    The result was down from a profit of $1.03 per diluted share in the same quarter last year when its bottom line was boosted by the sale of 56 gas stations in Western Canada.

    Analyst take on Empire’s quarter

    RBC analyst Irene Nattel said Empire’s operating results came in “a tick above forecast as consumer value-seeking behaviour stabilizes.” She said in a note that the company continues to execute on its strategy to maximize revenue in its full-service stores, despite the broader momentum in discount stores, though she added Empire is also growing its discount presence. Nattel has previously said Empire is overly exposed to the full-service part of the grocery sector compared with its competitors, giving it a relative disadvantage amid heightened price sensitivity. 

    Empire earnings highlights

    Here’s a breakdown of the results this week.

    • Empire Company (EMP/TSX): Earnings per share of $0.63 (versus $0.62 predicted). Revenue of $7.41 billion (meeting the prediction).

    Sales for what was the company’s first quarter totalled $8.14 billion, up from $8.08 billion a year earlier. Same-store sales for the quarter were up 0.5%, while same-store sales, excluding fuel, increased 1%.

    Medline said a year and a half after completing the rollout of loyalty program Scene+ across Canada, the program has more than 15 million members, with those members spending on average 55% more than non-members. “Scene+ has significantly boosted our incremental sales and margin compared to our prior loyalty program,” he said. 

    On an adjusted basis, Empire says it earned $0.90 per share in its latest quarter, up from an adjusted profit of $0.78 per diluted share in the same quarter last year. Shares in Empire closed up 5.6% on the Toronto Stock Exchange at $40.62. 

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    The Canadian Press

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  • Couche-Tard looks at acquisitions, and reports earnings drop – MoneySense

    Couche-Tard looks at acquisitions, and reports earnings drop – MoneySense

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    The focus on acquisitions comes as the Quebec-based chain behind the Couche-Tard and Circle K banners is preparing for only its second CEO shuffle in its almost 45-year history and battling an economic landscape where customers are proving cash-strapped and less likely to spend.

    When is Couche-Tard’s new CEO taking over?

    The company said Wednesday that Hannasch, who has been with the firm for 10 years, will retire on Sept. 6. When chief operating officer Alex Miller takes over the top job, Hannasch will become a special adviser to his successor and the executive chair of the company’s board, tasked with assisting with mergers and acquisitions.

    News of Hannasch’s future came the same day the company hosted a call to discuss its fourth-quarter performance with analysts.  During the period ended April 28, the chain saw its net earnings attributable to shareholders tumble to $453 million from $670.7 million a year earlier.

    RBC Capital Markets analyst Irene Nattel described the results as “not a quarter for the history books,” but said it was “a better outcome” than the company had seen in its prior quarter.

    Couche-Tard blamed the results on lower gross margins on fuel, the quarter being a week shorter than last year, and expenses and depreciation related to investments and acquisitions, but said the period was also marked with economic headwinds.

    The effects of less consumer spending

    “No doubt, this was another challenging quarter with persistent inflation and continued pressure on consumers who are carefully watching their spending,” Hannasch said.

    On the fuel front, he has noticed customers buying lower amounts per visit. Inside stores, there’s been a gravitation toward private label products and shoppers trading down from premium to lower tier brands in categories like alcohol.

    Cigarette sales have also been “an issue,” he said.

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    The Canadian Press

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  • Reddit is preparing to sell shares to the public – MoneySense

    Reddit is preparing to sell shares to the public – MoneySense

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    While it’s not clear from the perspective just how many of those 1.76 million shares will end up in the hands of Reddit users, the number is likely large enough for those users to exert meaningful pressure on Reddit’s share price. The main concern is that a surge of demand for shares that aren’t locked up could create a sudden run-up in the share price, followed by an equally sharp decline once the initial excitement wears off and short-sellers—investors who effectively place bets that a stock will decline—begin to gather.

    That’s pretty much what happened with Robinhood Markets, which operates a simple-to-use and low cost trading platform aimed at novice investors that also offered IPO shares to its users. The company’s stock opened at $38 on its first day of trading in July 2021, shot up to $85 five days later, then plunged back to roughly $40 after just six weeks. Robinhood closed Monday at $16.86.

    “Mishandling this process could result in [Reddit] alienating their most ardent supporters, potentially turning them into critics,” warned Deiya Pernas, co-founder of Pernas Research.

    But, Don Montanaro, president of the trading platform Firstrade, argues that Reddit may not have had much choice but to go this route.

    “They’ve been running a business where their clients, their users, are their product,” he said. “It’s a case of, ‘What else could we do? This is who we are, how could we not offer this to these people?’ ”

    Can I get in on this offering?

    If you don’t already have a Reddit account, you’re probably out of luck. The offering is only available to users who had established accounts as of January 1, 2024.

    Beyond that, shares will be distributed to Redditors and moderators via a formula that accounts for their measurable contributions to the discussion boards. Redditors with high “karma” scores—a measure of their contributions to the community, such as posts that other Redditors find useful, amusing or insightful—will be grouped into six priority tiers for access to the stock offering.

    Moderators who have taken significant numbers of “moderator actions” will likewise be sorted into those tiers. Such actions can include anything from designing a new discussion group—a.k.a. a “subreddit” in the jargon of the site—to removing spam or duplicate posts, to enforcing subreddit rules. Moderators will also be rated on membership trends in their subreddits.

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    The Canadian Press

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