Empire Company to close Alberta e-commerce facilities

Executive Summary

• Empire Company Ltd. (via subsidiary Sobeys Inc.) announced a strategic rationalization of its e-commerce network to improve profitability, expecting to deliver approximately $95 million in annualized operating income by fiscal 2027.
• The company will incur approximately $750 million in non-cash impairment and related cash charges in the third quarter of fiscal 2026 due to the underperformance and closure of its e-commerce facilities in Western Canada.
• The update involves the immediate wind-down of Alberta e-commerce facilities (Calgary and Edmonton) and a continued pause on the Vancouver facility, while maintaining and growing operations in Ontario and Quebec through the Voila banner and Ocado partnership.

Key Details

• Financial Impact:
  • Expected annualized operating income improvement of ~$95 million by fiscal 2027.
  • One-time non-cash impairment and cash charges of ~$750 million expected in Q3 fiscal 2026.
• Western Canada Operations (Wind-down):
  • Immediate closure of the Alberta e-commerce customer fulfillment centre (Calgary area) and support facility (Edmonton).
  • Continued pause on the development of the customer fulfillment centre in the Vancouver area.
  • Reason for closure: Alberta grocery e-commerce market size and expansion were smaller than anticipated; operations did not meet financial expectations.
  • Impact: No material impact expected on same-store sales growth.
  • Customer Service: Western Canada customers will continue to be served via existing third-party delivery partnerships.
• Eastern Canada Operations (Expansion/Stability):
  • Ontario and Quebec operations (Voila banner) will continue using existing fulfillment centres in the Greater Toronto Area and Montreal.
  • These operations are described as growing steadily and are key to the overall offering.
  • Partnership with Ocado remains strong to improve productivity and profitability in these high-growth regions.
• New Partnerships:
  • Expansion of third-party delivery partnerships through a new collaboration with DoorDash.
  • Rollout expected in the coming months.
  • Goal: Expand home delivery options for grocery essentials across Canada via a leading local commerce platform.

Notable Quotes

• "We remain highly committed to grocery e-commerce in Canada and on continuing to make on-line shopping more convenient for our customers while delivering immediate bottom line improvements to our e-commerce business," said Pierre St-Laurent, president and chief executive officer, Empire.
• "Customers in Ontario and Quebec love Voila, and, while difficult, the decisions we have made related to our CFC network in Western Canada will help ensure the long-term growth and profitability of our e-commerce business," said Mr. St-Laurent.