Companies

Sobeys owner Empire lifts Q1 profit, says it won't accept tariff-related price hikes from suppliers

Empire earned $233 million in its first quarter as fuel sales jumped, and told analysts it is refusing supplier requests to pass on tariff costs, for now.

By John Wilson · September 10, 2026

Empire Company Ltd., the parent of Sobeys, Safeway, IGA, FreshCo and Thrifty Foods, reported higher first-quarter profit on Thursday and said it is pushing back against suppliers who want to raise prices because of the new round of Canada–U.S. tariffs.

The Stellarton, N.S.-based grocer earned $233 million, or $1.04 per diluted share, in the 13 weeks ended Aug. 1, up from $212 million, or 91 cents per share, a year earlier. That is a 9.9% increase in net earnings and 14.3% on a per-share basis.

The numbers

Most of the top-line growth came from fuel rather than groceries. Food sales grew modestly, which is consistent with grocery inflation that has been cooling through the summer.

Sales: $8.48 billion, up 2.6% from $8.26 billion
Food sales: $7.92 billion, up from $7.79 billion; same-store food sales up 1.2%
Fuel sales: $553 million, up from $467 million, as higher oil prices lifted same-store fuel sales 18.9%
Operating income: up 7.6%
E-commerce (Voilà, IGA.net, ThriftyFoods.com and partners): sales up 11.3%
Capital spending: $220 million in the quarter, versus $138 million a year earlier

Tariffs: 'it's too early'

The quarter landed days after Canada's retaliatory duties of 15% to 50% took effect on a range of U.S. imports, including food such as dairy, molasses and honey. Those duties mirror the value of U.S. tariffs imposed on Aug. 22, and Washington has announced further tariffs and bans on some Canadian exports starting Sept. 29, The Canadian Press reported.

Chief customer officer Luc L'Archevêque told analysts the effect on the business has been "minimal" so far. Empire has received a handful of supplier requests for higher prices and has accepted none. "It's too early, so we won't accept any cost increases related to tariffs," he said, adding that the company will keep working with suppliers on alternatives.

Chief executive Pierre St-Laurent said the grocer is better positioned than during the first counter-tariff episode. "We feel even better now than 18 months ago," he said, noting the company's large assortment lets customers choose products that avoid U.S. goods.

Growth plans

Empire opened its first two FreshCo discount stores in Atlantic Canada on Aug. 20 and expects to open 13 more across Western Canada, Ontario and Atlantic Canada in fiscal 2027. It plans about $850 million in capital spending this fiscal year, roughly half on renovations and new stores, and announced plans to acquire nine Morelli's pharmacies in Ontario. The company said it expects to keep growing sales, expand gross margin excluding fuel and generate operating leverage.

The risks

Refusing tariff-related cost increases is a stance, not a guarantee. If duties stay in place, suppliers may keep pressing, and grocers may eventually have to absorb some of the cost or pass it on. Empire itself flagged continued uncertainty over the timing and extent of future tariffs. Fuel, which drove much of the sales gain, is volatile and low-margin, and same-store food growth of 1.2% is modest. Competition from discount banners at Loblaw and Metro also remains intense.

What it means for an ordinary Canadian investor or household

For shoppers, the main takeaway is that large grocers say they are resisting tariff-driven price increases for now, and that a wide choice of non-U.S. products is available. That may limit the impact of counter-tariffs on grocery bills in the short term, but it is not a promise for the months ahead.

For investors, grocers are often seen as defensive holdings because people keep buying food in slow economies. Empire's results show steady but not spectacular growth. As always, a single quarter should be weighed against valuation, dividends and your overall diversification. This is general information, not personalized advice.

Sources

General news and information, not individualized financial advice. Figures reflect the publication date.