December 13, 2017 2:01 pm

25% of Western Canada Sobeys, Safeway converting to discount FreshCo banner

THE CANADIAN PRESS/Jacques Boissinot

A quarter of the 255 Safeway and Sobeys stores in Western Canada will be converted to the discount FreshCo banner over the next five years, parent company Empire Co. Ltd. announced Wednesday.

The company made the announcement as it posted a loss in its latest quarter as it was hit by restructuring costs.

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READ MORE: Sobeys to cut 800 office jobs as part of reorganization of grocery business

Last month, Empire announced plans to cut about 800 office jobs as part of its plan to improve its operations amid rising challenges in the grocery industry including new rivals, technological change and rising minimum wages.

READ MORE: Are discount grocery stores becoming a myth?

The company warned it may not be able to fully offset the impact of minimum wage increases in Ontario and Alberta that will cost up to $25 million in its 2018 financial year and $70 million in its 2019 financial year.

News of the store conversions came on the same day a study was released saying the annual food bill for a Canadian family is expected to go up about $30 a month in 2018.

READ MORE: Love eating out? Expect steeper bills in 2018, new food report says

Food inflation overall is expected to rise between one and three per cent next year, says Canada’s Food Price Report, which was crafted jointly for the first time by researchers at Dalhousie University and the University of Guelph.

For an average family of four, that represents an increase of $348 to about $11,948 for the year. About 59 per cent of the expected hike — $208 — will come from consumers eating out and opting for prepared food.

“But if you are cooking and you rely mainly on grocery stores to get your food, you should be in good shape for 2018,” lead researcher Sylvain Charlebois said in an interview from Halifax.

Empire says it lost $23.6 million or nine cents per share for the 13-weeks ended Nov. 4 compared with a profit of $33.1 million or 12 cents per share a year ago. Sales in what was the company’s second quarter of its 2018 financial year grew to $6.03 billion, up from $5.93 million.

READ MORE: Sobeys takes big hit on Safeway supermarkets amid slowdown in West

On an adjusted basis, Empire says it earned $73.9 million or 27 cents per share, up from an adjusted profit of $32.9 million or 12 cents per share in the same quarter last year.

© 2017 The Canadian Press

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