Q1 2027 Empire Co Ltd Earnings Call

September 10, 2026

Operator: Good morning, ladies and gentlemen, and welcome to the Empire Company first quarter F27 conference call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question and answer session for our analysts only. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, 10 September 2026. I would now like to turn the conference over to Katie Brine. Please go ahead.

Operator: Good morning, ladies and gentlemen, and welcome to the Empire Company Q1 F27 conference call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question and answer session for our analysts only. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, 10 September 2026. I would now like to turn the conference over to Katie Brine. Please go ahead.

Speaker #1: Good morning, ladies and gentlemen, and welcome to the Empire Company first quarter F27 conference call. At this time, all lines are in listen-only mode.

Speaker #1: Following the presentation, we’ll conduct a question-and-answer session for our analysts only. If at any time during this call you require immediate assistance, please press *0 for the operator.

Speaker #1: This call is being recorded on Thursday, September 10, 2026. I would now like to hand the conference over to Katie Brine. Please go ahead.

Speaker #2: Thank you, Julie. Good morning, and thank you for joining us today for Empire's first quarter fiscal 2027 conference call. Today, we will provide summary comments on our results and then open the call for questions.

Katie Brine: Thank you, Julie. Good morning, and thank you for joining us today for Empire's first quarter fiscal 2027 conference call. Today, we will provide summary comments on our results and then open the call for questions. This 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 as well. Joining me on the call this morning are Pierre St-Laurent, President and Chief Executive Officer, Constantine Pefanis, Chief Financial Officer, and Luc L'Archevêque, Chief Customer Officer. Before we begin, I would remind you that today's discussion includes forward-looking statements. We caution that these statements are based on management's assumptions and beliefs and are subject to risks and uncertainties that could cause actual results to differ materially.

Speaker #2: This 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 as well.

Speaker #2: Joining me on the call this morning are Pierre St-Laurent, President and Chief Executive Officer; Costa Pefanis, Chief Financial Officer; and Luc Larchevec, Chief Customer Officer.

Speaker #2: Before we begin, I would like to remind you that today’s discussion includes forward-looking statements. We caution that these statements are based on management’s assumptions and beliefs and are subject to risks and uncertainties that could cause actual results to differ materially.

Speaker #2: I refer you to our news release and MD&A for more information on these assumptions and factors. With that, I'll turn the call over to Pierre.

Katie Brine: I refer you to our news release in MD&A for more information on these assumptions and factors. With that, I will turn the call over to Pierre.

Speaker #3: Thanks, Katie. Good morning, everyone. We delivered a strong first quarter, driven by disciplined execution across the business and continued progress against our strategic priorities.

Pierre St-Laurent: Thanks, Katie. Good morning, everyone. We delivered a strong Q1, driven by disciplined execution across the business and continued progress against our strategic priorities. Despite the market environment that remains challenging, with customer highly focused on overall value and affordability, our banners continue to perform well. We delivered a record-high Q1 EPS of CAD 1.04, up 14.3% year-over-year. This performance reflects improvement in our core business and benefit from our cost efficiency initiatives. Our Q1 results reflect the strength of our underlying operation, as well as the focus we have placed on productivity, efficiency, and discipline execution across the organization. I will focus on three topics today: our Q1 results and market trends, an update on our strategic priorities and growth initiatives, and our new leadership appointment. Starting with Q1 results, food sales grew 1.7%, with same-store sales up 1.2.

Speaker #3: Despite the market environment that remains challenging, with customers highly focused on overall value and affordability, our banners continue to perform well. We delivered a record-high first quarter EPS of $1.04, up 14.3% year over year.

Speaker #3: This performance reflects improvement in our core business and benefits from our cost efficiency initiatives. Our Q1 results reflect the strength of our underlying operations, as well as the focus we have placed on productivity, efficiency, and disciplined execution across the organization.

Speaker #3: I'll focus on three topics today. Our first quarter results and market trends, an update on our strategic priorities, and growth initiatives and our new leadership appointment.

Speaker #3: Starting with Q1 results, food sales grew 1.7%, with same-store sales up 1.2%. This reflects positive growth in both our full-service and discount businesses. Total e-commerce sales across our platforms, and third-party partnerships, increased 11.3% year over year.

Pierre St-Laurent: This reflects positive growth in both our full service and discount businesses. Total e-commerce sales across our platforms and third-party partnerships increased 11.3% year-over-year. Gross margin, excluding fuel, was essentially flat year-over-year. That was in line with our expectation, given strong prior year comparison, higher supply chain cost, and elevated fuel-related expenses during the quarter. Despite those headwinds, we were pleased with the performance of the core business. We were also pleased with our cost efficiency during the quarter. The improvements we are seeing reflect the benefit of our multi-year focus on productivity and efficiency across the organization. This was our third consecutive quarter with operating leverage. Costa will provide more details on the drivers. Turning to the current environment, internal inflation remained below StatCan food CPI during the quarter, reflecting our continued focus on delivering value for customers while managing supplier cost increases in a disciplined manner.

Speaker #3: Growth margin excluding fuel was essentially flat year over year. That was in line with our expectation, given the strong prior year comparison, higher supply chain costs, and elevated fuel-related expenses during the quarter.

Speaker #3: Despite those headwinds, we were pleased with the performance of the core business. We were also pleased with our cost efficiency during the quarter. The improvements we are seeing reflect the benefit of our multi-year focus on productivity and efficiency across the organization.

Speaker #3: This was our third consecutive quarter with operating leverage. Costa will provide more details on the drivers. Turning to the current environment, internal inflation remained below StatsCan food CPI during the quarter.

Speaker #3: Reflecting our continued focus on delivering value for customers while managing supplier cost increases, in a disciplined manner. The market environment remained challenging, and consumer continued to be focused on value and affordability given fuel price volatility and ongoing trade-related uncertainty.

Pierre St-Laurent: The market environment remained challenging and consumer continued to be focused on value and affordability, given fuel price volatility and ongoing trade-related uncertainty. Across North America, retailers are reporting a more cautious customer environment, and we are seeing many of the same trends here in Canada. Against this backdrop, we are pleased to be gaining share in full service while maintaining our position in discount, despite the rapid expansion of discount formats across the market. As we continue to expand discount footprint, we expect that growth to increasingly support market share gains in the channel. The recent escalation in the Canada and US trade tension has also increased customer interest in supporting Canadian businesses and products, which is something we are equally passionate about.

Speaker #3: Across North America, retailers are reporting a more cautious customer environment as we are seeing many of the same and we are seeing many of the same trend here in Canada.

Speaker #3: Against this backdrop, we are pleased to be gaining share in full-service while maintaining our position in discount, despite the rapid expansion of discount formats across the market.

Speaker #3: As we continue to expand our discount footprint, we expect that growth to increasingly support market share gains in the channel. The recent escalation in the Canada-U.S. trade tension has also increased customer interest in supporting Canadian businesses and products.

Speaker #3: Which is something we are equally passionate about. While purchasing decisions will continue to be driven by value, quality, and convenience, we believe our deep Canadian roots, long-standing relationships with Canadian suppliers, and portfolio of locally operated banners position us well to serve customers in this environment.

Pierre St-Laurent: While purchasing decision will continue to be driven by value, quality, and convenience, we believe our deep Canadian roots, long-standing relationship with Canadian suppliers, and portfolio of locally operated banners position us well to serve customer in this environment. As a proud Canadian company, we will continue to invest meaningfully across the country through new stores, new jobs, local supplier partnership, and the ongoing growth of our business to help our country become stronger. Against this backdrop, our priorities are unchanged, delivering value for customer, maintaining operational discipline, and executing with focus against our priorities. We continue to increase momentum across our four strategic priorities, customer, stores, growth, and cost efficiency. We have already touched on cost efficiency, so I will spend a few minutes sharing an update on the other three. Starting with customers, our investment in customer value are resonating.

Speaker #3: As a proud Canadian company, we will continue to invest meaningfully across the country through new stores, new jobs, local supplier partnerships, and the ongoing growth of our business to help our country become stronger.

Speaker #3: Against this backdrop, our priorities are unchanged. Delivering value for customer, maintaining operational discipline, and executing with focus against our priorities. We continue to increase momentum across our four strategic priorities: customer, stores, growth, and cost efficiency.

Speaker #3: We have already touched on cost efficiency, so I'll spend a few minutes sharing an update on the other three. Starting with customers, our investments in customer value are resonating.

Speaker #3: We are seeing very encouraging improvement in price perception and growing recognition of the value available across all of our banners. In the current environment, we continue to strengthen our value proposition through promotions, loyalty, own brand, personalization, and our value-size offers.

Pierre St-Laurent: We are seeing very encouraging improvement in price perception and growing recognition in the value of the label across all our banners. In the current environment, we continue to strengthen our value proposition through promotions, loyalty, own brand, personalization, and our value size offers. We are encouraged by the progress we are seeing in our customer data and remain committed to delivering value, compelling value, whether you are shopping at Sobeys, FreshCo, Safeway, IGA, Farm Boy, Longo's, Voilà, and any other banners. Turning to stores, we continue to invest in our store network to support long-term growth. We opened four new stores during Q1, plus the addition of four Mayrand stores. We now expect to complete more than 25 new stores this year, up from our prior expectation of more than 20. We are pleased with the performance of recently opened stores.

Speaker #3: We are encouraged by the progress we are seeing in our customer data and remain committed to delivering value compelling value whether you are shopping at Sobeis, Freshco, Voila, and any other banners.

Speaker #3: Turning to stores, we continue to invest in our store network to support long-term growth. We opened four new stores during Q1, plus the addition of four Mehran stores.

Speaker #3: We now expect to complete more than 25 new stores this year, up from our prior expectation of more than 20. We are pleased with the performance of recently opened stores; we are meeting or exceeding our expectations, and this reinforces our confidence in the strength of our growth pipeline.

Pierre St-Laurent: We are meeting or exceeding our expectation and reinforcing our confidence in the strength on our growth pipeline. These investment are now expecting to deliver approximately 2% square footage growth and strengthen our ability to serve customer across the country. We continue to evolve our approach to real estate, balancing new store growth with opportunity to optimize our existing network and improve capital efficiency. While our real estate strategy continue to evolve, our investment discipline remains the same. We pursue attractive white space opportunities and deploy capital where we believe it will generate the highest return for shareholders.

Speaker #3: These investments are now expected to deliver approximately 2% square footage growth and strengthen our ability to serve customers across the country. We continue to evolve our approach to real estate, balancing new store growth with opportunities to optimize our existing network and improve capital efficiency.

Speaker #3: While our real estate strategy continues to evolve, our investment discipline remains the same. We pursue attractive white space opportunities and deploy capital where we believe it will generate the highest return for shareholders.

Speaker #3: And we continue to focus on making our store more efficient and customer-focused. This includes the continued rollout of electronic shelf labels, with over 400 stores now live across the country, as well as initiatives to enhance in-store signage, improve store conditions, and evolve our ways of working to spend less time on manual tasks and more time focused on customers.

Pierre St-Laurent: We continue to focus on making our store more efficient and customer-focused. This includes the continued rollout of electronic shelf labels with over 400 stores now live across the country, as well as initiatives to enhance in-store signage, improve store condition, and evolve our ways of working to spend less time on manual tasks and more time focused on customers. On growth, we have accomplished a lot since we last spoke, and this remains a top priority for us. A key milestone in our discount expansion strategy was the opening of our first FreshCo store in Atlantic Canada in August, and early customer response are very encouraging. We also completed the Morelli's pharmacies acquisition in June, and in August, broke ground for a new Morelli's pharmacies location in Trois-Rivières, Quebec.

Speaker #3: On growth, we have accomplished a lot since we last spoke, and this remains a top priority for us. A key milestone in our discount expansion strategy was the opening of our first FreshCo stores in Atlantic Canada in August, and early customer responses are very encouraging.

Speaker #3: We also completed the Mehran acquisition in June, and in August broke ground for a new Mehran location in Touarega, Quebec. While we're still in the early stages of the integration, we are excited about the opportunity ahead and the potential to expand this business.

Pierre St-Laurent: While we are still in early stage of the integration, we are excited about the opportunity ahead and the potential to expand this business. We continue to grow our store footprint, and just in the last month, opened two new FreshCo stores in Calgary, a new IGA Extra in Montreal, a new IGA in Edmonton, a new Safeway in Vancouver, Oakridge Park development, and a new FreshCo in Paris, Ontario. These openings reflect the strength of our growth pipeline and our commitment to serving more customers in communities across Canada. We also continue to strengthen our pharmacy business, which remain an attractive growth platform for Empire. In August, we welcomed Nitu Singh, our new SVP, Pharmacy. Nitu, who reports to our Chief Pharmacy and Development Officer, Doug Nathanson, brings more than 20 years of industry experience and has already hit the ground running.

Speaker #3: We continue to grow our store footprint, and just in the last month we opened two new FreshCo stores in Calgary, a new IGA Extra in Montreal, a new IGA in Edmonton, a new Safeway in Vancouver at the Oakridge Park development, and a new FreshCo in Paris, Ontario.

Speaker #3: These openings reflect the strength of our growth pipeline and our commitment to serving more customers in communities across Canada. We also continue to strengthen our pharmacy business, which remains an attractive growth platform for Empire.

Speaker #3: In August, we welcomed Nitu Singh, our new SVP, Pharmacy. Nitu, who reports to our Chief Pharmacy and Development Officer, Doug Nittensen, brings more than 20 years of industry experience and has already hit the ground running.

Speaker #3: Last month, we announced the acquisition of nine more Release pharmacies, co-located with Longo's stores in Ontario. These pharmacies will be integrated into our national pharmacy operations and rebranded as Longo's Pharmacy.

Pierre St-Laurent: Last month, we announced the acquisition of nine more Morelli's pharmacies co-located with Longo's stores in Ontario. These pharmacies will be integrated into our national pharmacy operations and rebranded as Longo's Pharmacy. While the acquisition is modest in size, strategically, it is important. It expands our network in markets where we already have strong customer relationships and reflects our disciplined approach to growing this business through both organic initiatives and targeted acquisitions. Finally, I am pleased to welcome Lara Skripitsky to Empire's executive leadership team, as our new Chief Technology and Transformation Officer. With more than 20 years of experience, most recently having spent 12 years in a leading global consumer brand, Lara brings a proven track record of driving transformation, modernizing technology platforms, and enhancing the customer experience. Julia Knox will work closely with Lara to ensure a seamless transition.

Speaker #3: While the acquisition is modest in size, strategically it is important. It expands our network in markets where we already have strong customer relationships and reflects our disciplined approach to growing this business through both organic initiatives and targeted acquisitions.

Speaker #3: Finally, I'm pleased to welcome Lara Skripitsky, to Empire's executive leadership team, as our new chief technology and transformation officer. With more than 20 years of experience, most recently having spent 12 years in a leading global consumer brand, Lara brings a proven track record of driving transformation modernizing technology platform and enhancing the customer experience.

Speaker #3: Julian Ox will work closely with Lara to ensure a seamless transition. Overall, this first quarter reinforces our confidence in both our strategy and our outlook for the year ahead.

Pierre St-Laurent: Overall, this Q1 reinforces our confidence in both our strategy and outlook for the year ahead. Our banners are competing effectively, our growth initiatives are gaining traction, and our focus on productivity and efficiency is delivering results. As a result, we continue to expect adjusted EPS growth in the high-end of our long-term financial framework in fiscal 2027. Our focus remains very clear, delivering value for customers, driving sustainable growth, and strengthening our business for the long term. With a strong start to the year, we remain well positioned to deliver an attractive return to our shareholders. Dynamic environments create opportunity for strong operators to differentiate themselves, and that is what we will continue to do. With that, I will turn the call over to Costa.

Speaker #3: Our banners are competing effectively, our growth initiatives are gaining traction, and our focus on productivity and efficiency is delivering results. As a result, we continue to expect adjusted EPS growth at the high end of our long-term financial framework in fiscal 2027.

Speaker #3: Our focus remains very clear: delivering value for customers, driving sustainable growth, and strengthening our business for the long term. With a strong start to the year, we remain well positioned to deliver attractive returns to our shareholders. Dynamic environments create opportunities for strong operators to differentiate themselves, and that is what we will continue to do.

Speaker #3: With that, I'll turn the call over to Costo.

Speaker #2: Thanks, Peter. Good morning, everyone. I'll begin with our first quarter results and then discuss capital allocation. We delivered a solid start to the year with Q1 fiscal 27 EPS of $1.04 of 14.3% from last year.

Constantine Pefanis: Thanks, Pierre. Good morning, everyone. I will begin with our Q1 results and then discuss capital allocation. We delivered a solid start to the year with Q1 fiscal 2027 EPS of CAD 1.40, up 14.3% from last year. The results reflected sales growth, disciplined cost control, including benefits from our e-commerce changes and share repurchases. While we benefited from the previously announced pension settlement gain, this was offset by lower year-over-year contribution from other income and share of earnings from equity investments. We delivered good top line growth this quarter, and we expect the gap between same store and total sales growth to widen in the quarters ahead as contribution from new stores begins to ramp up as they mature. Excluding the mix impact of fuel sales, gross margin was consistent with last year. Strong execution in full service offset higher fuel-related supply chain costs, demonstrating the resilience of our business.

Speaker #2: The results reflected sales growth, disciplined cost control—including benefits from our e-commerce changes—and share repurchases. While we benefited from the previously announced pension settlement gain, this was offset by a lower year-over-year contribution from other income and share of earnings from equity investments.

Speaker #2: We delivered good top-line growth this quarter, and we expect the gap between same-store and total sales growth to widen in the quarters ahead as contribution from new stores begins to ramp up as they mature.

Speaker #2: Excluding the mix impact of fuel sales, gross margin was consistent with last year. Strong execution and full service offset higher fuel related supply chain costs.

Speaker #2: Demonstrating the resilience of our business. While performance can vary from quarter to quarter, our focus remains on driving sustainable improvement over time and we continue to target annual gross margin expansion excluding fuel of 10 to 20 basis points.

Constantine Pefanis: While performance can vary from quarter to quarter, our focus remains on driving sustainable improvement over time, and we continue to target annual gross margin expansion excluding fuel of 10 to 20 basis points. Turning to SG&A, our focus on cost efficiency continues to deliver stronger results. Excluding depreciation and amortization, our SG&A rate improved by 80 basis points, driven by lower year-over-year incentive program expenses, pension settlement gain, and better overall cost efficiency in the business, including e-commerce operational improvements. These benefits more than offset continued business expansion, investment in the business, including stores, tools, and technology, and higher retail salaries. We continue to advance initiatives to optimize supplier and procurement spend, leverage new technology and digital capabilities, and enhance how work gets done across the business. As these initiatives mature, they are helping create capacity to reinvest in growth while supporting operating leverage.

Speaker #2: Turning to SG&A, our focus on cost efficiency continues to deliver stronger results. Excluding depreciation and amortization, our SG&A rate improved by 80 basis points.

Speaker #2: Driven by lower year-over-year incentive program expenses, the pension settlement gain, and better overall cost efficiency in the business, including e-commerce operational improvements.

Speaker #2: These benefits more than offset continued investment in the business, including stores, tools, and technology, as well as higher retail salaries. We continue to advance initiatives to optimize supplier and procurement spend, leverage new technology and digital capabilities, and enhance how work gets done across the business.

Speaker #2: As these initiatives mature, they are helping create capacity to reinvest in growth while supporting operating leverage. As we look ahead, SG&A performance may not progress in a straight line each quarter.

Constantine Pefanis: As we look ahead, SG&A performance may not progress in a straight line each quarter, but we are confident in our ability to generate operating leverage on an annual basis. As a result, EBITDA was CAD 712 million, higher by 6.1% year over year, and our EBITDA margin was 8.4%, higher by 28 basis points year over year. This was the strongest EBITDA performance that we have delivered since Project Horizon began more than 10 years ago. Our effective tax rate was 26.1%, compared to 26% last year. Now I will move on to capital allocation. Our strong balance sheet and cash generation provide the flexibility to invest in the business, pursue strategic opportunities, and return capital to shareholders. We continue to expect fiscal 2027 capital expenditures of approximately CAD 850 million, with about half allocated to renovations and new store expansion.

Speaker #2: But we're confident in our ability to generate operating leverage on an annual basis. As a result, EBITDA was 712 million. Higher by 6.1% year over year and our EBITDA margin was 8.4%.

Speaker #2: Higher by 28 basis points year over year. This was the strongest EBITDA performance that we've delivered since Project Horizon began more than 10 years ago.

Speaker #2: Our effective tax rate was 26.1 compared to 26% last year. And now I'll move on to capital allocation. Our strong balance sheet and cash generation provide the flexibility to invest in the business, pursue strategic opportunities, and return capital to shareholders.

Speaker #2: We continue to expect fiscal '27 capital expenditures of approximately $850 million, with about half allocated to renovations and new store expansion. These new stores are expected to grow our net square footage by about 1.5% year over year, and that's before taking into account the new Merant stores.

Constantine Pefanis: These new stores are expected to grow our net square footage by about 1.5% year over year, and that is before taking into account the new Mayrand stores. As of today, we have repurchased approximately 2 million shares for a total consideration of CAD 95 million. Moving on to real estate. in Q1, we disposed of our equity interest in Genstar for proceeds of CAD 71 million and a gain of CAD 4 million. While this was a great investment, we felt that it was the right time to liquidate. We will deploy these proceeds to accelerate growth of our business. The sale of Genstar will not impact our guidance on other income and share of earnings from equity investments, and we continue to anticipate fiscal 2027 contribution to range from CAD 90 million to CAD 110 million.

Speaker #2: As of today, we have repurchased approximately 2 million shares for a total consideration of $95 million. Moving on to real estate, in Q1 we disposed of our equity interest in Genstar for proceeds of $71 million and a gain of $4 million.

Speaker #2: And while this was a great investment, we felt that it was the right time to liquidate. We will deploy these proceeds to accelerate the growth of our business.

Speaker #2: The sale of Genstar won't impact our guidance on other income and share of earnings from equity investments, and we continue to anticipate fiscal '27 contribution to range from $90 million to $110 million.

Speaker #2: Based on our current visibility, we expect the quarterly cadence for the rest of the year to be approximately 15% in Q2, 20% in Q3, and 50% in Q4.

Constantine Pefanis: Based on our current visibility, we expect the quarterly cadence for the rest of the year to be approximately 15% in Q2, 20% in Q3, and 50% in Q4. In closing, Q1 demonstrated the earnings potential of our core operations and the early benefits of the strategic actions we have begun to implement across the business. We delivered EPS growth of 14.3%, generated operating leverage, improved EBITDA margin to 8.4%, and continued to invest for the future. Despite a dynamic operating environment, we continue to expect adjusted EPS growth at the high end of our financial framework of 8% to 11% in fiscal 2027, supported by gross margin expansion and operating leverage. With that, I will turn it back to Katie for your questions.

Speaker #2: In closing, Q1 demonstrated the earnings potential of our core operations and the early benefits of the strategic actions we've begun to implement across the business.

Speaker #2: We delivered EPS growth of 14.3%, generated operating leverage, improved EBITDA margin to 8.4%, and continued to invest for the future. Despite a dynamic operating environment, we continue to expect adjusted EPS growth at the high end of our financial framework of 8 to 11% in fiscal 27, supported by gross margin expansion and operating leverage.

Speaker #2: With that, I'll turn it back to Katie for your questions.

Speaker #3: Thank you, Costa. Julie, you may open the line for questions at this time.

Katie Brine: Thank you, Costa. Julie, you may open the line for questions at this time.

Speaker #4: Thank you, ladies and gentlemen. We will now conduct the question and answer session for our analysts. If you'd like to ask a question, please press star one on your telephone keypad.

Operator: Thank you. Ladies and gentlemen, we will now conduct a question and answer session for our analysts. If you would like to ask a question, please press star one on your telephone keypad. If you would like to withdraw your question, press star two. One moment, please, for your first question. Your first question comes from Chris Li from Desjardins. Please go ahead.

Speaker #4: If you'd like to withdraw your question, press star two. One moment, please, for your first question. Your first question comes from Chris Lee from Desjardins.

Speaker #4: Please go ahead.

Speaker #5: Hi, good morning, everyone. My first question is, as you mentioned, as the consumer remains challenged and industry tonnage is a little bit softer, just curious to see, are you seeing any notable changes in the competitive environment?

Chris Li: Hi. Good morning, everyone. My first question is, Pierre, as you mentioned, as the consumer remains challenged and industry tonnage is a little bit softer, just curious to see, are you seeing any notable changes in the competitive environment? Is intensity remaining stable, or have you seen an uptick during the quarter? Thank you.

Speaker #5: Is the intensity remaining stable, or have you seen sort of an uptick during the quarter? Thank you.

Speaker #6: I'll ask my chief customer, Professor Officer, to answer this question and I will complete if I need.

Pierre St-Laurent: I will ask my Chief Customer Officer to answer this question, and I will complete if I need.

Speaker #2: Yeah, yeah, good morning. So no, we haven't seen anything in the market that indicates promotional activities being different than the previous quarters. It's very stable.

Luc L'Archevêque: Yeah. Good morning. No, we have not seen anything in the market that indicates promotional activities being different than the previous quarters. It is very stable. This is based, obviously, on third-party data.

Speaker #2: This is based, obviously, on third-party data.

Speaker #5: Okay, perfect. And my follow-up is, I know you don't provide any quarterly guidance, but I just wanted to ask: What are you seeing in terms of Q2 to date, in terms of same-store sales?

Chris Li: Okay, perfect. My follow-up is, I know you do not provide any quarterly guidance, but I just wanted to ask, what are you seeing in terms of Q2 to date, in terms of same store sales? Are you seeing a bit of a stabilization versus what you reported in Q1? Any directional comments will be helpful. Thank you.

Speaker #5: Are you seeing a bit of a stabilization versus what you reported in Q1? Just any directional comments would be helpful. Thank you.

Speaker #6: It's a bit early to answer this question, Q2, particularly because there's some timing effect from the long weekend for Labor Day. Last year, it was earlier than this year, so it's a bit early to look at it. But in terms of customer behavior, it's remained unchanged so far.

Pierre St-Laurent: It is a bit early to answer this question, Q2, and particularly because there is some timing effect for the long weekend for Labor Day. Last year it was earlier than this year, so it is a bit early to look at it. But in term of customer behavior, it has remained unchanged so far. Where we are going to land for the Q2 results, it is too early to take a position on that. We need to wait another full 2, 3 weeks to see the full impact of that timing on a 2-year basis. But too early. But do not see any major changes. The market tonnage is something we will measure at the end of quarter. But again, sentiment remained the same. The promo intensity remained the same. Customer behavior, it is nothing new. I think customers are looking for value. They are making different choices considering the fuel prices volatility.

Speaker #6: Where we're going to land at for the Q2 results, it's too early to take a position on that. We need to wait another full two, three weeks to see the full impact of that timing.

Speaker #6: On a year, two-year basis. But too early. But don't see any major changes. So the market tonnage is something we will measure at the end of quarter and but again, sentiments remain the same.

Speaker #6: The promo intensity remained the same. Customer behavior—it's not nothing new. I think customers are looking for value. They are making different choices, considering the fuel prices, volatility, but it's all that stuff.

Pierre St-Laurent: But it is all that stuff. It is not something new for us. It is manageable, and our merchandising team is doing an amazing job to navigate through it.

Speaker #6: It's not something new for us. It's manageable and our merchandising team is doing an amazing job to navigate for it.

Speaker #5: Perfect. Thank you and all the best.

Chris Li: Perfect. Thank you, and all the best.

Speaker #6: Thank you.

Pierre St-Laurent: Thank you.

Operator: Your next question comes from Tamy Chen from BMO Capital Markets. Please go ahead.

Speaker #4: Your next question comes from Tammy Chen from BMO Capital Market. Please go ahead.

Speaker #7: Hi, good morning. Thanks for the question. I'm just trying to reconcile your comments—you sound happy with the performance of your newer, slash recently opened, stores.

Tamy Chen: Hi. Good morning. Thanks for the question. I am just trying to reconcile your comments about, you sound happy with the performance of your newer, recently opened stores, but your food same-store sales, I think is softer than some of us expected.

Speaker #7: But your food same store sales and I think of softer than some of us expected. And especially given that a competitor has been having strike issues so are you able to help me reconcile that?

Tamy Chen: Especially given that a competitor has been having strike issues. Are you able to help me reconcile that? Are we starting to see all this square footage growth, so the new stores for everybody are hitting the ground well, but everybody's existing stores' tonnage is giving up some of that to the new stores?

Speaker #7: Is it, are we starting to see all this square footage growth, so the new stores for everybody are hitting the ground well, but everybody's existing stores' tonnage is giving up some of that to the new stores?

Speaker #6: Okay, so on new stores, I mentioned the recent opening, which was in Q2—it was not in Q1, to answer your question. I know you're trying to reconcile the number and understand that.

Pierre St-Laurent: Okay. On new stores, I mentioned the recent opening, which was in Q2. It was not in Q1, to answer your question. I know you are trying to reconcile a number and understand that. My message was more on the recent store opening. We are pleased with that, especially in Atlantic Canada. What was the other question? Sorry about that.

Speaker #6: So my message was more on the most the recently store opening, the recent store opening. We're pleased with that, especially in Atlantic, Canada. What else?

Speaker #6: What was the other question? Sorry about that.

Speaker #7: Just that on the strike,

Tamy Chen: Just-

Tamy Chen: Just.

Pierre St-Laurent: Oh, the strike.

Tamy Chen: That-

Tamy Chen: That.

Pierre St-Laurent: The strike.

Tamy Chen: Yes.

Pierre St-Laurent: Okay. On the strike, I do not have my competitor numbers, but one thing I can say is at the beginning of the strike, we saw a slight positive impact in produce in Quebec. It took, as usual, two, three weeks to put in place strong contingency plans like we did in the past. We know that type of thing, and Metro did the same thing, and I think since then, no significant impact. It was in Q4. It was not in Q1.

Speaker #6: okay, I don't have my competitive numbers, but one thing I can say is at the beginning of the strike, we saw a slight positive impact in produce, in Quebec.

Speaker #6: But it took, as usual, two or three weeks to put in place a strong contingency plan, like we did in the past. We know that type of thing.

Speaker #6: And Metro did the same thing. And I think since then, no significant impact. And it was in Q4. It was not in Q1.

Speaker #7: I guess what I'm getting at, even bigger picture, is the square footage growth continues in the industry, not just by you and so how do you think about that over the next one to two years?

Tamy Chen: I guess what I'm getting at, the even bigger picture is, the square footage growth continues in the industry, not just by you. How do you think about that over the next one to two years, just in terms of same store tonnage for you, how to maintain your fair share versus your competitors, because everyone seems to be adding or possibly even just accelerating the pace of new store openings. Thank you.

Speaker #7: Just in terms of same store tonnage for you, how to maintain your fair share versus your competitors because everyone seems to be adding or possibly even just accelerating the pace of new store openings.

Speaker #7: Thank you.

Speaker #6: Yeah, it's a good question. So right now, so when we're investing in real estate, we're investing for the long term. Right now, we're facing unique conditions.

Pierre St-Laurent: Yeah, it's a good question. When we're investing in real estate, we're investing for the long term. Right now, we're facing unique conditions. It's a cycle. My first degree at university was in economic. It's clearly a cycle. When we look at different indicator and when you are listening economists, it's obvious that conditions are not at their best. I think over time this will improve. If you think about the fuel price, if you think about customer confidence, and you look at uncertainties, it's a current situation. In the future, in my opinion, there's just upside. We're investing capital for the long term, not for next week. Our approach in investing capital is not on average. We're not looking at total number across the country. We're looking at opportunities, market by market.

Speaker #6: It's a cycle. My first degree at university was in economics. It's clearly a cycle. When we look at different indicators and when you are listening to economists, it's obvious that conditions are not at their best.

Speaker #6: I think over time, this will improve. So if you think about the fuel price, if you think about market customer confidence, and you look at uncertainties, it's a current situation.

Speaker #6: In the future, in my opinion, they're just upside. And we're investing capital for the long term, not for next week. So our approach in investing capital is not on average.

Speaker #6: We're not looking at total number across the country. We're looking at opportunities. Market by market. And we're at a strong portfolio of brands and we're using it as a leverage to be relevant for customers.

Pierre St-Laurent: We had a strong portfolio of brands, and we're using it as a leverage to be relevant for customers. That's our approach. Over time, what will be the results of that? Right now it's tough to, I would say, make association with current number with a long-term investment plan, right? We're facing a unique condition right now, could be just better in the future. We remain confident that in the future things are going to improve. We're doing the right thing. We're very disciplined in our approach and everything we do at Empire, and it's going to benefit us over time. We're very confident about that. Everybody's having different strategy. We believe in our strategy, obviously, and the early results, our new store openings are very encouraging. We did select location, which was very wide space for us, and the approach we'll continue to have.

Speaker #6: That's our approach. So over time, what will be the results of that? So right now, it's tough to, I would say, make association with current number with a long-term investment plan, right?

Speaker #6: So, we're facing a unique condition right now. It could just get better in the future. We remain confident that, in the future, things are going to improve.

Speaker #6: We're doing the right thing. We're very disciplined in our approach and everything we do at Empire. And this is going to benefit us over time.

Speaker #6: We're very confident about that. So and everybody's having different strategy. We believe in our strategy, obviously. And the early results, our new store openings are very encouraging.

Speaker #6: We did select location which was very wide space for us. And the approach will continue to have.

Speaker #7: Thank you.

Tamy Chen: Thank you.

Speaker #4: Your next question comes from John Zamparo from Scotiabank. Please go ahead.

Operator: Your next question comes from John Zamparo from Scotiabank. Please go ahead.

Speaker #6: Thanks very much. Good morning. Pierre, it sounds like you're fairly constructive on the ability to operate in a tougher consumer environment. I wonder if you could talk about how your business performed through the quarter.

John Zamparo: Thanks very much. Good morning. Pierre, it sounds like you are fairly constructive on the ability to operate in a tougher consumer environment. I wonder if you could talk about how your business performed through the quarter. Was there any meaningful change month to month?

Speaker #6: Was there any meaningful change month to month? Not really. We're improving focused on discipline execution and focusing where we have control. And there's many areas in our business where we have control.

Pierre St-Laurent: Not really. We are improving, focused on disciplined execution and focusing where we have control. There are many areas in our business where we have control, and I am very pleased with the performance of the team. If you look at SG&A, gross margin, the focus on cost, people are looking for the future. We are a company that we have a long-term view, long-term focus, and it will not change. I think tough conditions are creating opportunities, and right now we are trying to leverage every single opportunity that tougher conditions are bringing to the business. So we have reason to improve things right now because we have to. We will benefit from all the action we are taking right now, the control we have on the business right now. When conditions will improve, I am very confident that our results will be great.

Speaker #6: And I'm very pleased with the performance of the team if you look at SG&E, gross cost. People are looking for the future. We're a company that delivered we have a long-term view, long-term focus.

Speaker #6: And it won't change. I think tough conditions are creating opportunities. And right now, we're trying to leverage every single opportunity that tougher conditions are bringing to the business.

Speaker #6: So we have reason to improve things right now because we have to. And we will benefit from all the action we're taking right now, the control we have on the business right now.

Speaker #6: When conditions improve, I'm very confident that our results will be great. Okay, understood. And then I wanted to ask about SG&A. There were a lot of moving parts to that this quarter.

John Zamparo: Okay. Understood. I wanted to ask about SG&A. A lot of moving parts to that this quarter. I wonder if you can share what core SG&A growth was this quarter absent those items. I know you do not look quarter to quarter, but is it fair to say for this year you are targeting an SG&A growth rate excluding those items that is below the pace of sales growth?

Speaker #6: I wonder if you can share what core SG&A growth was this quarter, absent those items? And I know you don't look quarter to quarter, but is it fair to say for this year you're targeting an SG&A growth rate excluding those items that is below the pace of sales growth?

Speaker #6: I'll ask Costa to answer this question. No one is better positioned to answer this question than Costa.

Pierre St-Laurent: I will ask Costa to answer this question. No one is better positioned to answer this question than Costa.

Speaker #3: Good morning, John. Yeah, so to answer the question, excluding the puts and takes that we talked about in the prepared remarks, we continue to see that our SG&A run rate is stable and declining.

Constantine Pefanis: Good morning, John. Yes, to answer the question, excluding the puts and takes that we talked about in the prepared remarks, we continue to see that our SG&A run rate is stable and declining when you take into consideration the cost of the inflationary pressures on the business. So we are very happy to say that our operating leverage continues to be a big piece of the strategy, especially in the conditions that we are facing right now. The answer is, we continue to optimize around our spend so that we can get better value out of what we are doing. Okay, I will pass it on. Thank you.

Speaker #3: When you take into consideration the cost of the inflationary pressures on the business, we're very happy to say that our operating leverage continues to be a big piece of the strategy, especially in the conditions that we're facing right now.

Speaker #3: So the answer is we continue to optimize around our spend so that we can get better value out of what we're doing.

Speaker #6: Okay, I'll pass it on. Thank you.

John Zamparo: Okay, I will pass it on. Thank you.

Speaker #5: Good job.

Pierre St-Laurent: Good job.

Operator: Your next question comes from Vishal Shreedhar from National Bank. Please go ahead.

Speaker #4: Your next question comes from Vishal Sridhar from National Bank. Please go ahead.

Speaker #7: Hi, thanks for taking my questions. I know it's a bit early, but the escalating trade circumstances with the US seem to have caused a customer reaction, and I was wondering if you're seeing any early signs of 'buy Canada,' and do you expect that movement to benefit your stores?

Vishal Shreedhar: Hi. Thanks for taking my questions. I know it is a bit early, but the escalating trade circumstances with the US seems to have caused a customer reaction, and I was wondering if you are seeing any early signs of Buy Canada, and do you expect that movement to benefit your stores? Similarly, should the pressure related to these trade circumstances exacerbate or last longer than we hope, how do conventional banners react in periods of consumer malaise? Do we see more promotional intensity build in these conventional banners? Maybe you can help me understand what you know from history.

Speaker #7: And similarly, should the pressure related to these trade circumstances exacerbate or last longer than we hope, how do conventional banners react in periods of consumer malaise?

Speaker #7: Do we see more promotional intensity build in these conventional banners? Maybe you can help me understand what you know from history.

Pierre St-Laurent: I will ask Luc to start, and I will complete.

Speaker #6: I'll ask Luke to start. We'll complete.

Speaker #2: Yes, so thanks for that question. So I would say, like you said, it's very early days. In the tariff situation, the counter tariffs, I should say, what we know so far, it's minimal impact on our business this time around.

Luc L'Archevêque: Yes. Thanks for that question. I would say, like you said, it is very early days in the tariff situation, the counter-tariffs, I should say. What we know so far, it is minimal impact on our business this time around, very much less categories that are impacted. We know there is a sentiment out there from the customer to buy Canadian products, but it is too early to see any signs of that in our POS data. But if things continue that way, we do believe there could be an upswing on Canadian products for sure. The way that we also handle this internally, as, repeating myself, early days, but we have less than a handful of suppliers that reached out with cost increase submissions. Again, very minimal with the portrait that it is today.

Speaker #2: Very much less categories that are impacted. We know there's a sentiment out there from the customer to buy Canadian products but it's too early to see any signs of that in our POS data.

Speaker #2: But if things continue that way, we do believe there could be an upswing on Canadian products, for sure. The way that we also handle this internally—as I’m repeating myself, it’s early days—but we have less than a handful of suppliers that have reached out with cost increase submissions.

Speaker #2: So again, very minimal with the portrait that it is today. Things might change, but what we see so far, it's minimal. And our position will remain the same as the first time around, which is that it's too early.

Luc L'Archevêque: Things might change, but what we see so far, it is minimum, and our position will remain the same as the first time around, is that it is too early, so we will not accept any cost increases related to tariffs, and we will work very closely with our supplier partners to find solutions so that we do not impact our customers, and we defend the value that we provide to our customers. I will finish by saying, though, that we have some experience now and better tools, so we are going to react faster than the first time around.

Speaker #2: So we won't accept any cost increases related to tariffs, and we'll work very closely with our supplier partners to find solutions so that we don't impact our customers and we defend the value that we provide to our customers.

Speaker #2: I'll finish by saying though that we have some experience now and better tools. So we're going to react faster than the first time around.

Speaker #7: Thank you. And with respect to how—and I appreciate this is a question looking forward and the situation may or may not evolve—but how do conventional banners respond during periods of heightened stress?

Vishal Shreedhar: Thank you. I appreciate this is a question looking forward, and the situation may or may not evolve, but how do conventional banners respond during periods of heightened stress? Is that hotter front-page flyers? Is that better messaging? I know it's a little bit of above, but I am trying to understand the playbook and the tolerance within your plan to accommodate this tariff situation should it exacerbate more than we would hope.

Speaker #7: Is that hotter front page flyers? Is that better messaging? I know it's a little bit of above, but I'm trying to understand the playbook and the tolerance within your plan to accommodate this tariff situation should it exacerbate more than we would hope.

Speaker #6: Okay, so first of all, in our full-service banner, we have the largest assortment. We have the largest assortment by definition. For customers, this is very convenient when they are looking for alternative or U.S. products.

Pierre St-Laurent: Okay, so first of all, in our full-service banner, we have the largest assortment. We have the largest assortment by definition. For customers, this is very convenient when they are looking for alternative or US product. So we are extremely well-positioned, and based on our past experience, our full service did perform really well in that type of context, so we are not concerned about it at all. Plus, everything we have done over the last 2, 3 years in providing value to customer, like I said in my script, we are seeing very positive signs in price perception. Our strategy are resonating more and more to customers, so we feel good. We feel even better now than 18 months ago when we had the first counter-tariff situation. We have a large assortment, so customer can make many different choices to avoid US products. So we are well-positioned for that. What else?

Pierre St-Laurent: Okay, so first of all, in our full-service banner, we have the largest assortment. We have the largest assortment by definition. For customers, this is very convenient when they are looking for alternative or US product. So we are extremely well-positioned, and based on our past experience, our full service did perform really well in that type of context, so we are not concerned about it at all. Plus, everything we have done over the last two, three years in providing value to customer, like I said in my script, we are seeing very positive signs in price perception. Our strategy are resonating more and more to customers, so we feel good. We feel even better now than 18 months ago when we had the first counter-tariff situation. We have a large assortment, so customer can make many different choices to avoid US products. So we are well-positioned for that. What else?

Speaker #6: So we're extremely well positioned and based on our past experience, our full-service did perform really well in that type of context. So we're not concerned about it at all.

Speaker #6: Plus, everything we've done over the last two, three years in providing value to customers, like I said in my script, we're seeing very positive signs in price perception. Our strategy is resonating more and more with customers.

Speaker #6: So we feel good. We feel even better now than 18 months ago when we had the first counter tariff situation. And we had a large assortment.

Speaker #6: So, customers can make many different choices to avoid U.S. products, so we're well positioned for that. What else? And we're not expecting that will create inflation.

Pierre St-Laurent: We are not expecting that will create inflation, because like we have done last time, we did not accept cost increases related to tariff because we have a lot of alternative already in our assortment. So this is not an inflationary pressure for our full-service and discount stores because our diversity in source of supply, especially in a non-US product. So we feel very confident based on our past experience. By the way, we did benefit from that in our past experience and our results. Right now, there is less category, like Luc said, so it is way more manageable, and we are really well-positioned with our banners across the country, our franchisees' operation, well-connected to customers and local suppliers. So we have tons of alternative for customer in Canada to avoid buying US product at very good prices.

Speaker #6: Because, like we've done last time, we did not accept cost increases related to tariffs because we have a lot of alternatives already in our assortment.

Speaker #6: So, this is not an inflationary pressure for our full-service and discount stores because of our diversity in source of supply, especially in the non-U.S. product.

Speaker #6: So we feel very confident that, based on our past experience—by the way, we did benefit from that in our past experience and our results.

Speaker #6: Right now, there's more there's less category like Luke said, so it's way more manageable. And we're really well positioned with our banners across the country, our franchisees operation, well connected to customers and local suppliers.

Speaker #6: So we have tons of alternative for customer in Canada. To avoid buying US product, at very good prices.

Speaker #7: Thank you.

Vishal Shreedhar: Thank you.

Speaker #4: Your next question comes from Irene Natel from RBC Capital Markets. Please go ahead.

Operator: Your next question comes from Irene Nattel of RBC Capital Markets. Please go ahead.

Speaker #8: Thanks, and good morning, everyone. Sticking with the topic of the day, which is the consumer, I'm just wondering—you alluded in your opening remarks to maybe some tweaking that you’ve done in your offering to respond to consumer value-seeking behavior.

Irene Nattel: Thanks, and good morning, everyone. Sticking with the topic of the day, which is the consumer, just wondering, you alluded in your opening remarks to maybe some sort of tweaking that you have done in your offering to respond to consumer value-seeking behavior. Can you talk about some of the initiatives that you have in place, whether it is more value packs or different animal proteins, whatever it is, any shifts that you have made, please? Thank you.

Speaker #8: Can you talk about some of the initiatives that you have in place, whether it's more value packs or sort of different animal proteins, whatever it is, any shifts that you've made?

Speaker #8: Please. Thank you.

Speaker #2: Yeah, thanks, Irene. Yeah, this is Luke. Yeah, well, I won't go too much into the details, but just our private label, we revamped a lot of products and packaging.

Luc L'Archevêque: Yeah. Thanks, Irene. Yeah, this is Luc. Well, I will not go too much into the details, but just our private label, we revamped a lot of products and packaging. Private label is resonating very strongly right now. Our loyalty program, Scene+, we see our memberships growing rapidly, so that program is resonating as well. We use that to do personalized offers. The response is great. We always had very strong promotional offers weekly and EDLPs. They are still very at par with the market, and we have put more focus on value size recently across the board, every banners, and the response has been great. As Guy said, we are really, really focused on providing value in many ways, shape, and form so that the customers appreciate it, and they see it. They shop our stores, and they appreciate the value.

Speaker #2: Private label is resonating very strongly right now. Our loyalty program, Scene Plus, is seeing our memberships grow rapidly. So that program is resonating as well.

Speaker #2: We use that to do personalized offers. The response is great. We've always had very strong promotional offers, weekly and EDLPs. They are still very apart with the market.

Speaker #2: And we put more focus on value size. Recently, across the board, every banners, and the response has been great. So as Piaf said, we are really, really focused on providing value in many ways, shape and form, so that the customers appreciate it.

Speaker #2: And they see it. They shop our stores and they appreciate the value. We measure good value scores and it's improving. So I would say high level, this is what we're doing.

Luc L'Archevêque: We measure good value scores, and it is improving. I would say high level, this is what we are doing.

Speaker #8: That's great. Thank you. And then just shifting gears ever so slightly, there was a sequential uptick in the pace of e-commerce sales. From the prior quarter, wondering recognizing that there's some distortion from Calgary, kind of wondering what you're seeing with the third-party partners and in the core of Willow business.

Irene Nattel: That is great. Thank you. Just shifting gears ever so slightly. There was a sequential uptick in the pace of e-commerce sales from the prior quarter. Recognizing that there is some distortion from Calgary, kind of wondering what you are seeing with the third-party partners and in the core Voilà business.

Speaker #6: We're encouraged by so we made, as you know, we made a difficult decision a few months ago. We remain committed. So we're seeing growth in our Willow operation as well as in our third-party partnerships.

Pierre St-Laurent: We are encouraged by. We made, as you know, we made a difficult decision a few months ago. We remain committed. We are seeing growth in our Voilà operation as well as in our third-party partnerships. E-commerce, generally speaking, is growing on all segments. It is different reason to shop, so it is a planned trip versus immediacy. We feel really good. We are well-diversified to meet different customer needs. By the way, Voilà is proposing a great value compared to third-party partnership, but again, third-party partnership are there to cover an immediacy need for customers. We feel good about that two segments we are working on. The team is also working to continue to leverage all the data we have, all the visits we have on our different platform to make more connection with different digital platform we have to drive sales in our different platform.

Speaker #6: So e-commerce generally speaking is growing on all segments. It's different reason to shop. So it's a planned trip versus immediacy. So we feel really good.

Speaker #6: We're well diversified to meet different customer needs. By the way, Willow is proposing a great value. Compared to third-party partnership. But again, third-party partnership are there to cover an immediacy need for customers.

Speaker #6: So we feel good about those two segments we're working on. The team is also working to continue to leverage all the data we have, all the visits we have on our different platforms, to make more connections with different digital platforms we have, to drive sales in our different platforms.

Speaker #6: So more to come on that, but e-commerce growth is a big focus for us. And now, we are with our new Chief Technology Officer.

Pierre St-Laurent: More to come on that, but e-commerce growth is a big focus for us. Now with our new Chief Technology Officer, this is something we are going to accelerate, but we have a strong plan in place. We feel very confident that the growth you are seeing right now in our e-commerce business is going to grow faster than in the past. In our forecast, we are expecting to see faster growth in the future than we have right now, but we are well-positioned, 11.2%, not that bad, but could be way better. We will focus on it, and it is what we call internally our e-commerce 2.0 strategy, and it is a big area of focus for our team right now.

Speaker #6: This is something we're going to accelerate, but we have a strong plan in place. We feel very confident that the growth you're seeing right now in our e-commerce business is going to continue.

Speaker #6: Faster than in the past. So, in our forecast, we're expecting to see faster growth in the future than we have right now. But we're well positioned—11.3%. Not that bad.

Speaker #6: But it could be way better, so we'll focus on it, and it's what we call internally our e-commerce 2.0 strategy. It's a big area of focus for our team right now.

Speaker #8: That's great. Thank you very much.

Irene Nattel: That is great. Thank you very much.

Speaker #6: Welcome. Thank you for your question.

Pierre St-Laurent: Welcome. Thank you for your question.

Speaker #4: Your next question comes from Brian Morrison from TD Cowan. Please go ahead.

Operator: Your next question comes from Brian Morrison from TD Cowen. Please go ahead.

Speaker #7: Yes, thank you. Good morning. Point of clarity—sorry if I missed this—but the five-store increase to 25 from 20, the five new adds, are they conventional or discount?

Brian Morrison: Yes, thank you. Good morning. Point of clarity, sorry if I missed this, but the five-store increase to 25 from 20. The five new adds, are they conventional or discount? Can you provide granularity upon the 25 for the full year in terms of full service and discount, please?

Speaker #7: And then, can you provide granularity on the 25 for the full year, in terms of full service and discount, please?

Speaker #6: It's both. It's a combination of discount and our four new Mehran stores in Quebec. So which I don't know how you will qualify them, even ourselves it's a unique proposition that resonating with customer a lot right now.

Pierre St-Laurent: It's both. It's a combination of discount and our four new Mayrand stores in Quebec. I don't know how you will qualify them. Even ourself, it's a unique proposition that's resonating with customer a lot right now. Yes. Basically, it's a bit higher than the forecast on our initial real estate plan, plus the addition of the four Mayrand stores. We're confident to say that as today, we will open more than 25 stores, and I hope we will continue to accelerate that growth in the future.

Speaker #6: But yes, so basically it's a bit higher than the forecast on our initial real estate plan, plus the addition of the four Mehran stores.

Speaker #6: So we're confident to say that as today. We will open more than 25 stores. And I hope we will continue to accelerate that growth in the future.

Speaker #7: Okay. And then maybe changing gears here, and I think probably best for Costa, but one of your peers recently talked about supply chain as a service as a real notable opportunity.

Brian Morrison: Okay, then maybe changing gears here, and I think probably best for Costa Pefanis, but one of your peers recently talked about supply chain as a service, as a real notable opportunity. I am curious how you are looking at this journey. Specifically, if you view this as an opportunity for Empire to better utilize your asset base, specifically for freight and warehousing.

Speaker #7: And I'm curious how you're looking at this journey—specifically, if you view this as an opportunity for Empire to better utilize your asset base, specifically for freight and warehousing.

Speaker #1: Yeah, Brian, I think when we look at what we're doing with managing our costs on supply chain, having the inbound freight act as a contract to this expense is something that we've always pressed on.

Constantine Pefanis: Brian, I think when we look at what we are doing with managing our costs on supply chain, having the inbound freight act as a counter to this expense is something that we have always pressed on. We continue to put more focus on that because of all the various costs associated to running our supply chain. Not only do we look at route optimization, we want to lean in with our partners to be able to provide that service. We can call it freight as a service, backhauling, inbound freight partnerships, any which way you call it, we are going to continue to position that as a key part of how we manage our costs and ultimately drive third-party revenue.

Speaker #1: We continue to put more focus on that because of all the various costs associated to running our supply chain. So not only do we look at route optimization, we want to lean in with our partners to be able to provide that service and we can call it freight as a service, backhauling, inbound freight partnerships, any which way you call it, we're going to continue to position that as a key part of how we manage our costs and ultimately drive third-party revenue.

Speaker #6: And we're seeing the same opportunity. By the way, we're in the same business. So right now, with the high fuel cost, our proposition with suppliers to take charge of the transportation is resonating more.

Pierre St-Laurent: We are seeing the same opportunity. By the way, we are in the same business. Right now with the high fuel cost, our proposition with supplier to take charge of transportation is resonating more. People are trying to avoid cost in their operation, and our proposition of backhauling or whatever the name you are giving to that, it is resonating more. I think over time, we will continue to generate additional revenues. We strongly believe that retail media will also deliver additional revenue. Because we did invest in that two years ago, and right now it is growing very quickly.

Speaker #6: People are trying to avoid costs in their operations. And our proposition of backhauling, or whatever name you're giving to that, is resonating more.

Speaker #6: So I think over time we'll continue to generate additional revenues like we're strongly believe that retail media will also deliver additional revenue. So because we did invest on that two years ago and right now it's growing very quickly.

Speaker #7: Okay. Thank you. Do you plan on providing any sort of parameters or benchmarks for those at some point in time?

Brian Morrison: Okay, thank you. Do you plan on providing any sort of parameters or benchmarks for those at some point in time?

Speaker #6: Not at this time. I understand the requests. We'll look at it and we'll come back to you.

Pierre St-Laurent: Not at this time. I understand the request. We will look at it, we will come back to you.

Speaker #7: Thank you very much.

Brian Morrison: Thank you very much.

Speaker #6: Welcome.

Pierre St-Laurent: Welcome.

Speaker #4: And there are no further questions at this time. I will turn the call back over to Katie for closing remarks.

Operator: There are no further questions at this time. I will turn the call back over to Katie for closing remarks.

Speaker #2: Thank you, Julie. We appreciate your continued interest in Empire. If there are any unanswered questions, please contact me by email. We look forward to having you join us for a second quarter fiscal 2027 conference call on December 10th.

Katie Brine: Thank you, Julie. We appreciate your continued interest in Empire. If there are any unanswered questions, please contact me by email. We look forward to having you join us for our Q2 fiscal 2027 conference call on 10 December. Talk soon.

Speaker #2: Talk soon.

Operator: Ladies and gentlemen, this concludes today's conference call. You may now disconnect. Thank you.