Empire Co. Ltd.’s CEO, Michael Medline, has reported that sales of products from the U.S. are rapidly dropping as shoppers seek to support the Canadian economy and avoid the potential effects of tariffs.
About 12% of Empire’s products are sourced from the U.S. in a normal year, but this is not a normal year. The company is shifting its supply to meet customers’ growing demand for Canadian and non-American products.
Empire, which owns multiple banners across the country, including Sobeys and FreshCo, has a roster of good alternatives in most categories, but produce is the hardest to replace.
Empire is working with its suppliers to ensure that unnecessary costs don’t get passed to customers, and some suppliers are proactively looking for solutions. For example, chocolate maker Lindt is shifting its production so that all the chocolate supplied to Canada will come from Europe instead of the U.S. by this summer.
Canada is in the midst of a trade war with the U.S. after President Donald Trump enacted sweeping tariffs on Canadian goods, and Ottawa has responded with two rounds of retaliatory tariffs on U.S. imports.
Medline believes Empire and the industry as a whole can “roll with the punches” and won’t be highly affected by tariffs, at least not directly. The biggest risk for Empire is not actually in their own business, but the impact on the Canadian economy as a whole. A weaker consumer environment will hurt the retail sector as a whole.
Empire reported a third-quarter profit of $146.1 million as its sales rose during the period. The parent company of grocery retailer Sobeys said the profit amounted to 62 cents per diluted share for the 13-week period ended Feb. 1, compared with a profit of $134.2 million or 54 cents per diluted share a year ago..
Source: The Globe and Mail
Source: The Star
