Empire Co. Ltd.

‘s CEO expressed relief over Canada’s recent removal of

retaliatory tariffs

on some goods, saying that any products in its grocery stores subjected to tariffs will no longer bear the additional costs.

Michael Medline, chief executive of the parent company of

Sobeys Inc.

, Safeway, IGA and Farm Boy, said the grocery giant has been “ensuring” that reactionary or unnecessary costs related to tariffs were not accepted and passed onto customers.

“We took a very hard stance on not accepting the vast majority of tariff-related cost increases, which is now proven to be the right approach for our customers and for Canadians,” Medline said during Thursday’s earnings call.

The CEO made the remarks on Sept. 11 as the company reported its first quarter earnings results for the fiscal year 2026. On Aug. 22,

Prime Minister Mark Carney

announced his government would rescind retaliatory tariffs imposed on many incoming American goods effective Sept. 1.

Medline said that given the company’s approach to managing tariffs, tonnage was relatively flat in the quarter, which he said came as no surprise given the recent tariff removal.

He said the company did take a small contribution to that lower inflation level, although it was immaterial.

He added that, other than typical fluctuations on a few commodity-linked products such as coffee, the retailer is not seeing anything out of the ordinary in terms of price increases.

U.S. products account for only 10 per cent of its overall offerings, he said, noting that it’s not material to overall inflation.

Even with the removal of some retaliatory tariffs, Canadian product sales continue to outpace sales of American products, the company said.

However, it said that over the last few months, the “buy Canadian” sentiment has moderated slightly from previous highs seen earlier in the year.

For the quarter ended Aug. 2, Empire reported net earnings of $212 million, up from $208 million in the prior year.

The company recorded its strongest ever earnings per share in the first quarter, reporting net earnings of $0.91 per share compared to $0.86 per share last year.

“Fiscal 2026 is off to a solid start as we delivered another quarter of strong bottom-line growth — the strongest quarterly earnings per share in our history — underscoring the fact that our team’s execution continues to improve,” said Medline.

The company reported a 5.1 per cent increase in gross profit to $2.235 million, driven primarily by higher sales and strong performance in full-service banners, it said.

Gross margin increased to 27.1 per cent from 26.1 per cent in the prior year, as a result of targeted efficiencies in its stores, including initiatives aimed at inventory control and reducing shrink.

Medline added that consumer sentiment is showing improvement, evidenced in part by improved basket size.

Food sales for the quarter was up by 2.6 per cent, thanks to positive growth across the business, particularly in full-service and discount banners and its national wholesale distribution network, Empire said.

Fuel sales, on the other hand, decreased by 13.7 per cent due to lower fuel prices resulting from the government’s cancellation of the carbon tax.

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The company said operating income from the food retailing segment increased 3.1 per cent to $369 million, mainly due to higher sales and gross profit, partially offset by higher selling and administrative expenses and an increase in depreciation and amortization.

Its EBITDA increased to $671 million from $645 million in the prior year, mainly as a result of higher gross profit.

• Email: dpaglinawan@postmedia.com