Empire Co. Ltd. (Symbol-EMP.A)
Re: Empire Co. Ltd. (Symbol-EMP.A)
Just be cautious Jay.....
I have always been a long-term holder of this company, but I didn't buy more yesterday. A drop in EBITDA like that along with statements that they're going to drop prices to attractive market share doesn't fuel confidence from me; it actually makes me very cautious. They have always had a very good management group, but so far their integration of Safeway looks questionable and you NEVER.....EVER compete on price unless you have a competitive advantage. You can say that you're going to "examine pricing" but if you are saying publicly that this is your strategy there are hundreds of companies who have used that technique improperly and failed.
I still have to read over the results from the 9th, but it will be interesting to see what the next few days go. I don't see it rebounding in 3 weeks like MFC did recently on poor financial results.
"Merchandising issues such as our private label conversion along with produce supply chain issues impacted the offerings being made to customers at store level." is not something you want to read. Businesses (without the right strategies) notoriously have a difficult time in North America expanding East-West vs. North-South.
I have always been a long-term holder of this company, but I didn't buy more yesterday. A drop in EBITDA like that along with statements that they're going to drop prices to attractive market share doesn't fuel confidence from me; it actually makes me very cautious. They have always had a very good management group, but so far their integration of Safeway looks questionable and you NEVER.....EVER compete on price unless you have a competitive advantage. You can say that you're going to "examine pricing" but if you are saying publicly that this is your strategy there are hundreds of companies who have used that technique improperly and failed.
I still have to read over the results from the 9th, but it will be interesting to see what the next few days go. I don't see it rebounding in 3 weeks like MFC did recently on poor financial results.
"Merchandising issues such as our private label conversion along with produce supply chain issues impacted the offerings being made to customers at store level." is not something you want to read. Businesses (without the right strategies) notoriously have a difficult time in North America expanding East-West vs. North-South.
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Re: Empire Co. Ltd. (Symbol-EMP.A)
Thanks for your input Brad. You are right. I did a bit of reading yesterday and now realize the bad performance was not all due to the write-off. I will give it some time and watch the price action. The drop on such high volume was a bit concerning to me and I have a feeling this goes quite a bit lower in the short term.
Re: Empire Co. Ltd. (Symbol-EMP.A)
OUCH!!! Down over 11%, down 35% YoY
CEO was pretty blunt today saying he expects the pain to continue. Always liked the management of this company (when I did own it for a long period of time) but you have to question their ability to execute at this point. Much easier to expand North-South then East-West and now it appears they're serious about competing on price (not a good idea!)
CEO was pretty blunt today saying he expects the pain to continue. Always liked the management of this company (when I did own it for a long period of time) but you have to question their ability to execute at this point. Much easier to expand North-South then East-West and now it appears they're serious about competing on price (not a good idea!)
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Re: Empire Co. Ltd. (Symbol-EMP.A)
I take it you are not interested at these levels Brad? I started a small position when it hit 20$ and have been waiting for $18 for quite some time. I think I will now wait for lower prices to average down.
Re: Empire Co. Ltd. (Symbol-EMP.A)
Can you expand on why you feel that Empire has a strong management team? Empire's management has missed the boat on the secular shift of consumers towards discount grocery stores. Empire's decision a few years ago to purchase Safeway's has turned out to be a disaster. The ineptness of Empire's management seems to be reflected in their stock price, which has drastically under-performed peers over the past few years (as per the following chart comparing Empire to Loblaws and Metro).brad911 wrote:..Always liked the management of this company ...
Re: Empire Co. Ltd. (Symbol-EMP.A)
Nice call on the stock Brad!
Re: Empire Co. Ltd. (Symbol-EMP.A)
And, as a customer, I have no love for this company. Rant: Self-checkout should offer at least a 1% discount as we, the consumer, are now doing the job of the cashier. But, no, that is not part of the plan to fleece us. The chocolate / candy crap is now all over the store, not just in the crap section. The deli people don't wear masks and sneeze and cough all over the deli prepared 'foods'. And that's being generous. The prices have risen way out of proportion to the cost of living to the point that we don't buy meat at all and rarely fish. I have no idea how the poor navigate their stores. Rant over.Arby wrote:Can you expand on why you feel that Empire has a strong management team? Empire's management has missed the boat on the secular shift of consumers towards discount grocery stores. Empire's decision a few years ago to purchase Safeway's has turned out to be a disaster. The ineptness of Empire's management seems to be reflected in their stock price, which has drastically under-performed peers over the past few years (as per the following chart comparing Empire to Loblaws and Metro).brad911 wrote:..Always liked the management of this company ...
2 yen
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Re: Empire Co. Ltd. (Symbol-EMP.A)
I decided some years back that the grocery business was low-margin and cutthroat, and never had the urge to add it to my portfolio.I have no love for this company
Sic transit gloria mundi. Tuesday is usually worse. - Robert A. Heinlein, Starman Jones
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Re: Empire Co. Ltd. (Symbol-EMP.A)
Well, that does it for my breakfast!The deli people don't wear masks and sneeze and cough all over the deli prepared 'foods'. And that's being generous.
Thanks for the discussion. Will steer clear of EMP.A in the grocery aisle.
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Re: Empire Co. Ltd. (Symbol-EMP.A)
I don't know much about the grocery business, but I've had Metro for quite a while and it's done OK. I use it for one of my Consumer Staples sector. Return of about 450% since 2008.Shakespeare wrote:I decided some years back that the grocery business was low-margin and cutthroat, and never had the urge to add it to my portfolio.I have no love for this company
ltr
Re: Empire Co. Ltd. (Symbol-EMP.A)
For dividend seekers, Northwest Company owns Giant Tiger (discount groceries) and other stores in quite a varied geographic locale. This company does not see a lot of share price appreciation, but it is well run and the dividend is solid.Shakespeare wrote:I decided some years back that the grocery business was low-margin and cutthroat, and never had the urge to add it to my portfolio.I have no love for this company
2 yen
Re: Empire Co. Ltd. (Symbol-EMP.A)
Sorry.JaydoubleU wrote:Well, that does it for my breakfast!The deli people don't wear masks and sneeze and cough all over the deli prepared 'foods'. And that's being generous.
Thanks for the discussion. Will steer clear of EMP.A in the grocery aisle.
2 yen
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Re: Empire Co. Ltd. (Symbol-EMP.A)
No worries. Was just kidding. But I was serious about the discussion being useful, to make me look hard and think twice about anything in the retail space.Sorry.
2 yen
I remember a financial analyst friend years ago warning me to stay clear of anything retail, where the competition is brutal and margins are razor-thin.
Edited to get those typos out!
Last edited by JaydoubleU on 30 Jun 2016 21:24, edited 2 times in total.
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Re: Empire Co. Ltd. (Symbol-EMP.A)
At the risk of going off topic, I used to own NWC. Sold when I read about excessive executive compensation. Was also getting concerned about the potential for online shopping (now including fresh foods), disrupting the traditional retail sector. I've read horror stories about the prices of fresh foods in the north. I wonder if it isn't possible to just go online and order food. (Mind you, delivery charges would likely be higher).For dividend seekers, Northwest Company owns Giant Tiger (discount groceries) and other stores in quite a varied geographic locale. This company does not see a lot of share price appreciation, but it is well run and the dividend is solid.
Re: Empire Co. Ltd. (Symbol-EMP.A)
Transportation gives them a pretty strong moat. Many of their stores can only be accessed by air. You don't get much more then the dividend as growth is not in the cards.JaydoubleU wrote:At the risk of going off topic, I used to own NWC. Sold when I read about excessive executive compensation. Was also getting concerned about the potential for online shopping (now including fresh foods), disrupting the traditional retail sector. I've read horror stories about the prices of fresh foods in the north. I wonder if it isn't possible to just go online and order food. (Mind you, delivery charges would likely be higher).For dividend seekers, Northwest Company owns Giant Tiger (discount groceries) and other stores in quite a varied geographic locale. This company does not see a lot of share price appreciation, but it is well run and the dividend is solid.
Re: Empire Co. Ltd. (Symbol-EMP.A)
I have done very well with two US retailers . TJX and Dollar Tree. One has to be be very careful in this sector. TJX is the clear leader in the discount retail market and Dollar Tree is the dominant player in the dollar store market. I wish I had bought Dollarama and Amazon. All of these stocks have a special story and a competitive advantage. Costco might be another retailer worth a look.JaydoubleU wrote:No worries. Was just kidding. But I was serious about the discussion being useful, to make me look hard and think twice about anything in the retail space.Sorry.
2 yen
I remember a financial analyst friend years ago warning me to stay clear of anything retail, where the competition is brutal and margins are razor-thin.
Edited to get those typos out!
Re: Empire Co. Ltd. (Symbol-EMP.A)
Yes, Dollarama has done well. Completely missed that one. Amazon is a great company, too. Just bought 3 books from Indigo online as they came in cheaper with more reliable delivery.Thegipper wrote:I have done very well with two US retailers . TJX and Dollar Tree. One has to be be very careful in this sector. TJX is the clear leader in the discount retail market and Dollar Tree is the dominant player in the dollar store market. I wish I had bought Dollarama and Amazon. All of these stocks have a special story and a competitive advantage. Costco might be another retailer worth a look.JaydoubleU wrote:No worries. Was just kidding. But I was serious about the discussion being useful, to make me look hard and think twice about anything in the retail space.Sorry.
2 yen
I remember a financial analyst friend years ago warning me to stay clear of anything retail, where the competition is brutal and margins are razor-thin.
Edited to get those typos out!
2 yen
Re: Empire Co. Ltd. (Symbol-EMP.A)
I think it depends on how you value the company. At their metrics now there I don't perceive their earnings growth to restart for at least 3-5 quarters so you have to take an approach of where you money is better placed. Right now that's in MRU (I've held both EMP.A & MRU for a long time until my sale of Empire recently). I'll continue to watch them closely, but the mistakes they've made are pretty straight forward, so if I see a change in leadership it might catch my interest.jay wrote:I take it you are not interested at these levels Brad? I started a small position when it hit 20$ and have been waiting for $18 for quite some time. I think I will now wait for lower prices to average down.
To be fair Arby you can't just look at the stock performance since 2014 vs. peers to draw a conclusion.Arby wrote:Can you expand on why you feel that Empire has a strong management team?....
Remember I'm a data nut. I have spreadsheets on this company dating back to 1992 and pre-Safeway their averaged annual book value growth of over 14% and annual dividend growth a hair under 12.5%. For a value oriented guy those were stellar numbers and hard to beat. ROE fluctuated, but was always in the 10-13x range. That type of track record speaks volumes, but you can make mistakes, miscalculate or just flat out fall on your face. I sold in the spring with the conviction of knowing this mistake may or may not be a fundamental shift in their approach, but you had to know this was going to be more then a single quarter hiccup.
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Re: Empire Co. Ltd. (Symbol-EMP.A)
Also missed Dollarama. I remember my father asking me about it some years ago. I sniffed, and missed a triple.I have done very well with two US retailers . TJX and Dollar Tree. One has to be be very careful in this sector. TJX is the clear leader in the discount retail market and Dollar Tree is the dominant player in the dollar store market. I wish I had bought Dollarama and Amazon. All of these stocks have a special story and a competitive advantage. Costco might be another retailer worth a look.
Also missed out on the ATD story. And I all because of my weird bias against retail . . .
Might consider NWC again, though, if it were a few dollars cheaper.
Re: Empire Co. Ltd. (Symbol-EMP.A)
Change in Empire's leadership and the market seems to like it.
Re: Empire Co. Ltd. (Symbol-EMP.A)
$0.25 too late......
I'm optimistic they will figure out how to stop the bleeding and get back to profit growth, but its the amount of time it will take that has my money on the sideline for now
I'm optimistic they will figure out how to stop the bleeding and get back to profit growth, but its the amount of time it will take that has my money on the sideline for now
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Re: Empire Co. Ltd. (Symbol-EMP.A)
Empire and Sobey's seem to have completely mismanaged the merger of operations with Safeway, and the CEO (for a change) is taking the hit for it.
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Re: Empire Co. Ltd. (Symbol-EMP.A)
New CEO has been announced, Michael Medline appointed President and CEO of Empire Company Limited
We have holdings in Metro (MRU) but we do most of our grocery shopping at Safeway and have seen the impact of the "completely mismanaged the merger of operations with Safeway".Empire press release wrote:The Board of Directors of Empire Company Limited (TSX: EMP.A) is very pleased to announce the appointment of Michael Medline as President & CEO of Empire Company Limited (Empire) and its wholly-owned subsidiary Sobeys Inc. Mr. Medline will also serve on the Board of Directors of Empire.
“Michael Medline is an outstanding Canadian retailer who brings a passion for the customer experience and a proven ability to drive strong operating and financial performance within national organizations and across multiple brands,” said James Dickson, Chair of Empire. “After an extensive international search, the Board is unanimous in its determination that Michael is the right choice to create long-term value for all our stakeholders.”
Mr. Medline is a proven leader with a strong track record of success. Prior to joining Empire, he served for more than 15 years in a variety of senior retail leadership roles at Canadian Tire Corporation, most recently as that organization’s President & Chief Executive Officer. He is ideally positioned to lead Empire in serving the needs of its customers and to oversee the return of long-term, profitable growth to the company.
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Normal people… believe that if it ain’t broke, don’t fix it. Engineers believe that if it ain’t broke, it doesn’t have enough features yet. – Scott Adams
Re: Empire Co. Ltd. (Symbol-EMP.A)
In a few areas I see it as a really good fit. He's led a national (coast to coast) operation and has had to compete with large US retailers. Those are two areas that Empire will need his skill set at. No plans to add this to the portfolio over MRU (my only grocer holding), but I think he'll be able to steer the ship around. I don't think you can expect the same earnings (or dividend) growth as the past 15 years.
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Re: Empire Co. Ltd. (Symbol-EMP.A)
This stock has been severely punished. At current levels, it has negative 3 and 5 year CAGRs and the worse 10-yr CAGR on record. Any good news like this will take it above $20 in no time. My cost base is $18.5 and hoping to see gains soon, but I'm biased .