Empire Co. Ltd. (Symbol-EMP.A)

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brad911
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Re: Empire Co. Ltd. (Symbol-EMP.A)

Post by brad911 » 11 Mar 2016 05:27

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.
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Re: Empire Co. Ltd. (Symbol-EMP.A)

Post by jay » 11 Mar 2016 10:40

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.

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Re: Empire Co. Ltd. (Symbol-EMP.A)

Post by brad911 » 29 Jun 2016 20:06

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!)
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Re: Empire Co. Ltd. (Symbol-EMP.A)

Post by jay » 30 Jun 2016 10:12

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.

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Re: Empire Co. Ltd. (Symbol-EMP.A)

Post by Arby » 30 Jun 2016 10:19

brad911 wrote:..Always liked the management of this company ...
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).
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Re: Empire Co. Ltd. (Symbol-EMP.A)

Post by nisser » 30 Jun 2016 12:40

Nice call on the stock Brad!

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Re: Empire Co. Ltd. (Symbol-EMP.A)

Post by 2 yen » 30 Jun 2016 18:16

Arby wrote:
brad911 wrote:..Always liked the management of this company ...
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).
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.

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Re: Empire Co. Ltd. (Symbol-EMP.A)

Post by Shakespeare » 30 Jun 2016 18:24

I have no love for this company
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.
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Re: Empire Co. Ltd. (Symbol-EMP.A)

Post by JaydoubleU » 30 Jun 2016 18:40

The deli people don't wear masks and sneeze and cough all over the deli prepared 'foods'. And that's being generous.
Well, that does it for my breakfast!

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)

Post by like_to_retire » 30 Jun 2016 18:46

Shakespeare wrote:
I have no love for this company
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 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.
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Re: Empire Co. Ltd. (Symbol-EMP.A)

Post by 2 yen » 30 Jun 2016 20:54

Shakespeare wrote:
I have no love for this company
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.
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.

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Re: Empire Co. Ltd. (Symbol-EMP.A)

Post by 2 yen » 30 Jun 2016 20:54

JaydoubleU wrote:
The deli people don't wear masks and sneeze and cough all over the deli prepared 'foods'. And that's being generous.
Well, that does it for my breakfast!

Thanks for the discussion. Will steer clear of EMP.A in the grocery aisle.
Sorry.

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Re: Empire Co. Ltd. (Symbol-EMP.A)

Post by JaydoubleU » 30 Jun 2016 21:09

Sorry.

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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.

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)

Post by JaydoubleU » 30 Jun 2016 21:22

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.
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).

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Re: Empire Co. Ltd. (Symbol-EMP.A)

Post by Thegipper » 30 Jun 2016 23:47

JaydoubleU wrote:
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.
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).
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.

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Re: Empire Co. Ltd. (Symbol-EMP.A)

Post by Thegipper » 30 Jun 2016 23:55

JaydoubleU wrote:
Sorry.

2 yen
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.

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!
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.

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Re: Empire Co. Ltd. (Symbol-EMP.A)

Post by 2 yen » 01 Jul 2016 06:20

Thegipper wrote:
JaydoubleU wrote:
Sorry.

2 yen
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.

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!
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.
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.

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Re: Empire Co. Ltd. (Symbol-EMP.A)

Post by brad911 » 04 Jul 2016 21:12

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.
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.
Arby wrote:Can you expand on why you feel that Empire has a strong management team?....
To be fair Arby you can't just look at the stock performance since 2014 vs. peers to draw a conclusion.
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)

Post by JaydoubleU » 04 Jul 2016 23:25

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 Dollarama. I remember my father asking me about it some years ago. I sniffed, and missed a triple.

Also missed out on the ATD story. And I all because of my weird bias against retail . . . :roll:

Might consider NWC again, though, if it were a few dollars cheaper.

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Re: Empire Co. Ltd. (Symbol-EMP.A)

Post by jay » 08 Jul 2016 15:39

Change in Empire's leadership and the market seems to like it.

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Re: Empire Co. Ltd. (Symbol-EMP.A)

Post by brad911 » 08 Jul 2016 20:35

$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
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Re: Empire Co. Ltd. (Symbol-EMP.A)

Post by OhGreatGuru » 11 Jul 2016 20:21

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)

Post by Peculiar_Investor » 13 Jan 2017 08:35

New CEO has been announced, Michael Medline appointed President and CEO of Empire Company Limited
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.
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".
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Re: Empire Co. Ltd. (Symbol-EMP.A)

Post by brad911 » 13 Jan 2017 09:01

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)

Post by jay » 13 Jan 2017 10:19

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 :).

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