Costs, Price Competition Hit Bottom Line at Sobeys

STELLARTON, Nova Scotia -- Expenses related to employee severance and a companywide systems initiative -- as well as its part in Ontario price competition that officials acknowledged was “irrational” -- contributed to a 27% decline in profits for Sobeys during the fiscal third quarter ended Feb. 3. Sobeys reported net income of about $28.3 million (U.S.) on sales of $2.75 billion. Earnings were impacted by $6 million devoted to Sobeys‘ ongoing process and system initiative and by $11 million related to rationalization of warehouses in Ontario and layoffs at headquarters. Sales were up 3% compared to the same period a year ago, and same-store sales increased by 1.8%. In a conference call Wednesday, Bill McEwan, president and chief executive officer, said Sobeys worked hard to maintain its pricing edge amid competition heightened by the opening of Wal-Mart supercenters there. “The marketplace went a little irrational, and we wanted to make sure that we protected the price-competitive position that was so difficult to achieve over the last two to three years,” he said.