Yahoo Finance Sobeys parent reports profit boost as B.C. workers vote to strike over 'insulting' offer
Workers at about 40 Safeway and FreshCo supermarkets in British Columbia are willing to walk off the job, according to a nearly unanimous strike authorization vote that union leaders say should be a wake-up call to the grocery chains’ parent company, Empire Co. Ltd., to stop making “insulting” wage offers at the bargaining table.
United Food and Commercial Workers Canada (UFCW), which represents about 2,500 workers at 40 Safeway locations and FreshCo pharmacies in B.C., asked members to authorize a strike earlier this week, hoping the threat of a strike would pressure Empire into offering a better deal.
After three days of voting, UFCW on Sept. 14 announced members voted 98 per cent in favour of strike authorization. That means union leaders have the ability call a strike, but UFCW said they plan to keep bargaining.
The vote ended on the same day that Empire, Canada’s second-largest grocer, reported better-than-expected sales and profit growth in the first quarter.
“Our members deserve to share in the success,” Kim Novak, president UCFW Local 1518, said in a news release on Sept. 15 that referenced Empire’s earnings performance.
The dispute is the latest in a wave of unrest among grocery workers in Canada. Earlier this summer, roughly 3,700 workers at Empire’s rival Metro Inc. walked off the job for more than a month, demanding the company increase wages by $2 per hour in the first year of any deal to make up for the removal of so-called “Hero Pay” bonuses that employees received early in the pandemic.
After a bitter standoff that included union picketers blocking trucks from Metro’s Toronto warehouses, both sides agreed on a deal that delivered a $4.50 hourly wage increase for full-time workers over four years. Unifor, the union that negotiated the deal, predicted it would have “a ripple effect across the entire sector.”
Novak said Empire was offering wage increases of no more than one per cent per year over the course of a five-year deal, with no increases in some of those years. She said the bargaining team wants to repeat the gains it made in a July agreement with Western Canadian grocer Save-On-Foods, which gives increases of 12 per cent over the course of the deal — the biggest raise the union said it’s negotiated in more than 20 years.
“The wage offer made by Sobeys is simply insulting to our members — and is forcing our hand,” Novak said in the statement. “The company does not appear to understand what the staff are up against in their day-to-day (lives).”
UFCW members voting in favour of a strike does not automatically trigger a walkout at the stores. Instead, it will authorize the bargaining committee to call a strike if needed.
Empire — the Stellarton, N.S.-based retailer that owns Sobeys, Safeway, IGA, FreshCo and Farm Boy, among others — reported net earnings of $261 million on sales of $8 billion in the 13 weeks ended Aug. 5. Quarterly profits jumped nearly 40 per cent compared to the previous year, though the company said the results were skewed by a $71.5-million gain from the sale of its gas stations in Western Canada.
Empire said profit was up 4.6 per cent compared to last year on an adjusted basis, which excluded proceeds from the sale of the gas stations, an insurance payout from a cybersecurity attack last year and a $7-million charge for “restructuring.”
The adjusted earnings of $196.2 million, or 78 cents per share, surpassed forecasts of 75 cents, though RBC Capital Markets analyst Irene Nattel in a note to investors on Sept. 14 said Empire’s results were “as expected.”
Same-store sales, a metric used to gauge year-over-year performance in retail by ignoring recently opened or closed stores, increased 4.1 per cent in Empire’s food division, above forecasts of 2.2 per cent.
“With all of that growth and all of that profit, we want to see workers getting some of the share,” Novak said.
Chief executive Michael Medline in a news release said the results were due in part to “solid control over our retail margins.” Empire’s gross margin, which measures profit after subtracting the cost of sales, increased 19 basis points in the quarter, excluding fuel.
Empire and its competitors in the grocery business have come under fire over the past year from consumer advocates and some economists for increases in their gross margins at a time when shoppers are facing the worst food inflation in 40 years. Medline has repeatedly denied the accusations, arguing the margin improvements are hard-won gains from a multi-year turnaround project at Empire.
“We don’t like inflation. We don’t like the choices it forces our customers to make. And we are not benefitting from it,” he told Empire’s annual general meeting on Sept. 14. “Thankfully, we are seeing food inflation in our business beginning to ebb and quite frankly it cannot happen fast enough.”
On a call with analysts later in the day, Medline said Empire’s internal measurements showed that food inflation in stores has dropped to the lowest levels in 17 months.
At the AGM, Empire’s shareholders voted in favour of an executive compensation package that would effectively give Medline a $1.9-million pay cut. Medline’s total compensation for 2023 is about $6.8 million, down from $8.7 million in 2022, according to the company’s management circular.
• Email: jedmiston@nationalpost.com
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