Empire Company Limited

TICKER EMP-A.TO

ISIN CA2918434077

Market cap. CAD

10,668,601,027

Shs outstanding 230,125,130

Empire Company Limited, together with its subsidiaries, engages in the food retail and related real estate businesses in Canada. It operates through two segments, Food Retailing, and Investments and Other Operations. The company owns, affiliates, and franchises approximately 1,600 retail stores under various retail banners, including Sobeys, Safeway, IGA, Foodland, FreshCo, Thrifty Foods, Farm Boy, Longo’s, and Lawtons Drugs; and approximately 350 retail fuel locations, as well as operates grocery e-commerce stores under the banners, such as Voilà, Grocery Gateway, IGA.net, and ThriftyFoods.com. It also owns interest in the Crombie Real Estate Investment Trust, an open-ended real estate investment trust to own, operate, and develop a portfolio of grocery and pharmacy-anchored shopping centers, freestanding stores, and mixed-use developments; and various equity accounted interests in Genstar partnerships that develop residential real estate properties in Ontario, Western Canada, and the United States. The company was founded in 1907 and is headquartered in Stellarton, Canada.

Strategy: Beat the TSX

Return at exit: 0.1%

Market performance and margin pressure concerns

• Rotated out as other retail stocks show stronger near-term momentum profiles. • Recent price performance shows concerning trend: -8.2% over one month and -14.8% over six months, despite positive 1-year return of 10.6%. • Multiple analysts (Desjardins, CIBC, BMO, TD) have lowered price targets in December, indicating shifting sentiment despite maintaining neutral-to-positive ratings. • Margin pressures emerging as BMO Capital notes gross margin expansion expected to moderate to 10-20 basis points (vs. previous 47 basis points), providing less cushion against rising costs. • Labor disputes with Safeway workers in Alberta and lingering effects from a previous cyberattack ($32M impact) add operational uncertainty. • Company maintains solid dividend growth (10%) and EBITDA growth (~9%). This change reflects portfolio rotation, not a sell signal.