STELLARTON, Nova Scotia - Sobeys here expects its ongoing strategic initiatives to pay off in stronger bottom-line results beginning sometime next year, Bill McEwan, president and chief executive officer, told analysts last week.
Those initiatives, including upgrades to business processes, the supply chain and systems designed to standardize and streamline buying, merchandising and warehouse management, have been under way in its Ontario operating region since earlier this year. A similar undertaking is scheduled to begin in western Canada at the end of this year and continue through fiscal 2007, McEwan said.
"We won't see the bulk of profits until we complete the Ontario transformation six months into fiscal 2007, but we should see a rising rate curve from there," McEwen said during a conference call to discuss financial results for the third quarter and 39 weeks that ended Feb. 4.
Net income for the 13-week quarter increased 2% to $39.6 million (U.S.), while sales rose 8.7% to $2.7 billion and same-store sales jumped 4.1%. For the year to date, net income was up 0.3% while sales climbed 10% to $8.4 billion and same-store sales rose 0.4%.
In response to a question, McEwen said the delay in seeing profits fall to the bottom line has nothing to do with Sobeys' promotional activities. "We have a much stronger competitive promotional pricing program that we continue to support, but we are not in a reactive mode to anyone in the marketplace," he explained.
"What you see on the bottom line is a result of spending a lot of money at a rapid pace to improve our infrastructure, train our people and make major changes without disruptions to the business, and those will pay off in the long term."
