Empire (TSX: EMP.A) reported fiscal Q1 2026 results showing 1.5% jump in sales to $8.26 billion from $8.14 billion in the comparable period last year.
Cost of sales grew just 0.2% to $6.02 billion while selling and administrative expense rose 3.9% to $1.89 billion on higher retail and supply-chain labour and incentive accruals.
Gross profit increased 5.1% to $2.24 billion on a 100 bps gross-margin expansion to 27.1%, reflecting stronger full-service execution, improved promotional mix, and lower shrink. Excluding the fuel mix, margin rose 63 bps.
Operating income was $382 million, up 3.5%. Net finance costs eased 2.7% to $71 million, pushing earnings before tax up 5.1% to $311 million. A higher effective tax rate at 26.0% lifted tax expense 20.9% to $81 million, tempering bottom-line growth.
Net earnings still increased 1.9% to $212 million from $208 million last year, lifting diluted EPS to a record $0.91 from $0.86 per share. On adjusted basis, net earnings declined 3.2% to $212 million from $219 million as the prior year included $14 million pre-tax related to e-commerce exclusivity and restructuring.
EBITDA increased 4.0% to $671 million, while adjusted EBITDA rose 1.8% to $671 million with an 8.1% margin.
Cash from operating activities fell 17.8% to $426 million, driven by a $142 million outflow from non-cash working capital and lower proceeds on asset disposals and lease terminations. Investing activities used $171 million while financing activities used $168 million. This leads to cash balance ending at $372 million, up from $313 million a year ago.
Free cash flow contracted 66.3% to $63 million from $187 million, reflecting the weaker operating cash generation and lower asset-sale proceeds.
Management targets long-term adjusted EPS growth via earnings and share purchases, with fiscal 2026 capital spend expected at $850 million (roughly 50% for new stores/renovations, 25% IT/business development, and balance for logistics/sustainability) and 1.5% store-footprint growth. The company expects combined pre-tax contributions from “Other income” and “Share of earnings from investments” of $120–$140 million in fiscal year 2026 vs. $158 million in fiscal 2025.
Under its share buyback, Empire repurchased 1.51 million shares for $80 million at an average $52.97, compared to prior year of 2.28 million shares for $80 million at $34.90. The board declared a $0.22 quarterly dividend, up from $0.20 a year ago.
Empire Company last traded at $51.54 on the TSX, dropping more than 2% on opening bell.
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