Sobeys is Ready to Grow Again

Article Excerpt

The supermarket industry is becoming increasingly competitive. Drug stores and other non-food retailers are adding grocery products to improve customer traffic and spending per visit. In the past, supermarkets responded to increased competition by cutting prices. But profit margins are typically less than 2% of sales, leaving little room for price cuts. Supermarkets are now looking at better ways to expand sales and profits, such as improving the quality of their stores, expanding product selection and upgrading distribution systems. Sobeys, like its main competitor Loblaw Companies Ltd., has invested heavily in the past few years in its business at the expense of profit growth. But while Loblaw has run into problems, Sobeys’ investments are now paying off. SOBEYS INC. $38 (Toronto symbol SBY; Conservative Growth Portfolio, Consumer sector; SI Rating: Average) operates 1,300 company-owned and franchised retail grocery stores in 10 provinces, mostly under the “Sobeys” and “Price Chopper” banners. It is the second-largest food seller in Canada, based on market share, behind Loblaw. Empire…

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