Empire Company Limited

And welcome to the Empire First Quarter 2020. The lines are in a listen-only mode. Following the presentation, we will conduct a comment session. We will give assistance. We will go for the operator. The panel is being recorded on Thursday, September 14, 2023. I would now like to turn the conference over to Ryan, VP Investment.

Thank you, Joanna. Good afternoon and thank you all for joining us for our first quarter conference call. Today we will provide summary comments on our results and then open the call for questions. The call is being recorded and the audio recording will be available on the company's website at empireco.ca. There is a short summary document outlining the points of our quarter available on our website. Joining me on the call this afternoon are Michael Medline, President and Chief Executive Officer, Matt Rangel, Chief Financial Officer, Pierre St. Laurent, Chief Operating Officer, and Doug Nathanson, Chief Development Officer and General Counsel. Today's discussion includes forward-looking statements. We caution that such statements are based on management's assumptions and beliefs and are not subject to uncertainties and other factors that could cause actual results to differ materially. I'll refer you to our news release and MD&A for more information on these assumptions and factors. I will now turn the call over to Michael Medline.

Good afternoon, everyone. Fiscal 24 is off to a good start. This quarter, we delivered positive top-line growth while maintaining strong control over margins. We also advanced our key strategic priorities, including making several executive leadership changes to enable our go-forward plans. Despite the market volatility we continue to face, the strong results delivered in Q1 exemplify our team's ability to consistently execute regardless of the macro environment. I'm going to keep my comments short and to the point, as I believe our first quarter results speak for themselves. I'll focus on three topics today. Our Q1 results and key market trends, an update on our strategic priorities, including the recent leadership changes, SIEM Plus and voila, and the release of our sustainable business report. First, our results and market trends. Our sales, excluding fuel, grew 4.8% this quarter, with same-store sales of 4.1%. This was supported by stronger top-line performance in our full-service banners, as well as continued double-digit sales growth of our discount banner. Our internal inflation was well below CPI, reaching the lowest rate we've seen in 17 months. We have positive indications this trend will continue. For example, in non-Fresh categories, we implemented approximately one-third of the value of cost increases in Q1 versus the prior year. Nonetheless, the reality is that we continue operating in uncertain times with high market volatility, rising interest rates, and inflationary pressures. Customers are continuing to adapt their purchasing behaviors in this environment, including trading down to cheaper alternatives and buying on promotion. Not surprisingly, in Q1, we saw greater uptake from customers of our flyer and in-store promotions in both our full service and discount banners. Our team remains focused on providing the best value and offering to customers, including growing our value size offering, increasing the number of products with SIEMplus member pricing, and expanding our own brands assortment this quarter, which continue to outpace the market with double digit growth. This quarter, we improved gross margin by 19 basis points, highlighting the discipline of our team while driving top line growth. With our solid sales performance and margin control, we delivered a 40 basis point increase in adjusted EBITDA margin and an adjusted EPS of 78 cents in Q1. I'll move now to an update on our strategic priorities. With our turnaround era complete, we began fiscal 2024 focused on ensuring we are set up to deliver against our renewed strategic priorities. As part of this effort, we made several executive leadership changes in Q1. We placed a number of talented leaders into key new roles. This team will play a pivotal role in helping drive the next phase of Empire's growth as we enhance our stores-first focus. An update on another key strategic priority, ScenePlus. Just over a year ago, we launched ScenePlus in Atlanta, Canada, and at the time, the program had approximately 10 million members. Today we have successfully completed our national rollout and ScenePlus has grown to over 14 million members. We have seen our active loyalty members increase over 30% this year and program awareness and affinity continue to grow. Through this partnership, ScenePlus has become the second largest loyalty program in Canada and is not done yet. In August, ScenePlus welcomed home hardware to the program. On to Voila! This quarter we successfully launched our CSC3 in Calgary and seamlessly integrated Grocery Gateway into Voila. We are pleased to now be offering Sobeys, Farm Boy, and Longo's products across Ontario. Grocery Gateway customers have quickly embraced Voila with strong repeat order rates and customer conversions exceeding targets. We continue to see strong customer retention rates and order frequency across all of our CSCs which helped contribute to our CFC's gaining national market share this quarter. Moving to my last topic, in July we released our third annual Sustainable Business Report. We are the first grocer in Canada to have our Scope 1 and 2 near-term climate targets validated through the Science-Based Targets Initiative. As part of our commitment to continuous improvement and transparency, we also published our inaugural Task Force on Climate-Related Financial Disclosures Aligned Report. And with that, over to Matt.