Empire Co (TSX:EMP) reported fourth-quarter financial results on Thursday. The transcript from the company's fourth-quarter earnings call has been provided below.
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Summary
Empire Company reported a strong finish to fiscal 2026 with an 8.7% growth in adjusted EPS, driven by disciplined execution and strategic priorities.
The company plans to accelerate new store openings, with more than 20 stores planned for fiscal 2027 and over 70 in the next three years, focusing primarily on the discount format.
Empire's gross margin expanded by 14 basis points for the full year, and they aim for a 10 to 20 basis point annual expansion over time.
The company announced a 10.2% increase in its quarterly dividend and plans to renew its NCIB to repurchase approximately 9.6% of its public float.
Empire is focusing on growth in pharmacy, discount, and E-commerce, with strategic initiatives including a new entry into the Quebec discount wholesale segment through the Merand acquisition.
For fiscal 2027, Empire expects adjusted EPS growth at the high end of their 8% to 11% financial framework, supported by food sales growth, margin expansion, and cost discipline.
Full Transcript
OPERATOR
Good morning ladies and gentlemen and welcome to the Empire Company Q4 2026 conference call. At this time, all lines are in listen only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, June 18, 2026. I would now like to turn the conference over to Katie Bryan, VP Investor Relations.
Please go ahead.
Katie Bryan (VP Investor Relations)
Thank you. Joelle. Good morning and thank you for joining us today for Empire's fourth quarter fiscal 26 conference call. Today we will provide summary comments on our results and then open the call for questions. This call is being recorded and the audio recording will be available on the company's website at EmpireCo.ca. There is a short summary document outlining the points of our quarter available on our website as well. Joining me on the call this morning are Pierre St. Laurent, president and Chief Executive Officer, Kosta Pafernis, Chief Financial Officer and Luc Larcher, Chief Customer Officer. Before we begin, I would like to remind you that today's discussion includes forward looking statements. We caution that these statements are based on management's assumptions and beliefs and are subject to risks and uncertainties that could cause actual results to differ materially. But refer you to our news release and MD&A for more information on these assumptions and factors.
With that, I'll turn the call over to Pierre.
Pierre St. Laurent (President and Chief Executive Officer)
Thanks, Katie. Good morning everyone. We delivered a very solid finish to fiscal 26 driven by disciplined execution across the business and continued progress against our strategic priorities. This translated into 8.7% adjusted Earnings Per Share growth for the year which is within our long term financial framework and gross margin expansion that is also within our target. We also continued operating with SG&A discipline that generated operating leverage especially in the back half of the year.
I'll focus on two topics today, our fourth quarter results and market trends and our expectation going forward, including strategic priorities as we move into fiscal 2027. Starting with our fourth quarter we delivered adjusted Earnings Per Share of $0.94 up 27% year over year excluding other income and share equity earnings. Largely real estate related Earnings Per Share grew 14.8% and looking at the full year in fiscal 26 we had a lower dependence on our real estate related income and delivered a core eps growth of 11.9%.
It is very important to management that we continue to build the strength of the core business and capitalize on market opportunities. Food sales grew 2.1% with same store sales up 1.4. Our two year same store sales stack improved sequentially through the year and was 5.3% in the quarter. This was driven by a strong performance in our full service network as well as continued momentum in discount. The solid performance that we are seeing across all of our formats give us confidence that customers continue to find value in our stores.
Fiscal 26 marked a clear shift towards new store growth. Following a period that was heavily focused on renovation and conversions, we are now accelerating new stores opening. With more than 20 stores already planned in fiscal 27 and more than 70 new stores planned over the next three years, we expect total food sales growth to outpace same store sales more meaningfully going forward. We will remain disciplined in how we allocate capital. Every new stores must deliver healthy returns, but we see significant opportunity and white space to capture new customers and drive top line growth.
In Q4 gross margin excluding fuel was flat year over year and expanded by 14bps into the full fiscal year within our target range of 10 to 20bps annually. This includes some pressure from higher outbound fuel costs in the second half of the quarter. While our margin has grown significantly over the past decade, we continue to see opportunities for consistent expansion including through enhancement of our merchandising tools and processes, growth of Empire Media plus and expansion of our personalization capabilities.
While quarterly performance may vary, we remain committed to our goal of delivering 10 to 20 basis point of annual margin expansion over time. Now I comment on what we're seeing in the current environment. Reported Consumer Price Index for food purchased from stores was 4.1% this quarter and our internal inflation remained well below that level. While we continue to see cost increase requests from suppliers, our national sourcing teams remain disciplined in protecting customer value.
Consistent to our approach on tariffs, we are pushing back on fuel related surcharges. We know many customers remain stretched and our focus is on continuing the strengthen of value proposition through deliveries we have including Scene Plus and targeted promotion along with our value size and on brand assortment. As we look ahead, our focus is on disciplined execution across our four strategic priorities customers, stores, growth and cost efficiency.
Each of these pillars are supported by clear tangible action and we will highlight a few examples. First, customers we continue to strengthen our value proposition across all formats and channels, ensuring customers have a great experience and see clear value wherever they shop. In Q4 we saw continued engagement across key elements of our customer value equation including growth in Scene participation, strong response to our promotional programs and continued momentum in our own brand and value size offerings.
Our focus remains on being the banner of choice in every market by delivering a consistently strong experience and clear value to customers at every shop Next Stores we are improving retail performance by investing in our store network and enhancing the in store experience for customers. In Q4, we completed 24 real estate projects including five new stores opening, four in discount and two conversions. Over the next three years, we plan to accelerate our level of activity, completing more than 90 projects annually, an increase of 25% compared to fiscal 25 and 26.
At the same time, we are continuing to activate several in stores program to make it easier for our teammates to serve customers. This includes effort like continued rollout in electronic shelf labels nationally as well as evolving in store processes and ways of working. Turning to Growth we remain focused on driving growth within our existing network, capitalizing on market opportunities and accelerating a key growth engines in areas such as discount pharmacy, E Commerce and retail media.
In Discount we are expanding into Atlantic Canada with three FreshCo locations opening in fiscal 26. Similar to our Western expansion, we have identified markets where we believe the banner can perform well, including one conversion from our existing network and two new locations. We were also pleased to announce the acquisition of Merand in April, which provides us with an entry point into the Quebec discount wholesale segment. We recently received court and regulatory approval and expect this transaction to close in the coming days.
Turning to Pharmacy the business is performing well and we see opportunities ahead. We finished our last fiscal year with strong results and are looking to continue that momentum. In terms of our strategy, right now we're focusing on optimizing the existing business and driving growth. Some immediate action we are taking include better leverage our central field capabilities and optimizing labor to improve both productivity and service to customers.
In parallel, we will continue to expand selectively, including adding pharmacy to new stores and being on the lookout for targeted opportunities to grow our network. You should think of this as the beginning of our journey pharmacy and we will share more details over time. In E Commerce, the closure of Alberta Customer Fulfillment CenterS represents another important step in improving the economics of the business. With continued sales growth and strong momentum, we see meaningful opportunity ahead through Vola and our third party partnerships including DoorDash, which has performed well since launching nationally in April.
The team continues to pursue other initiatives to drive growth in our E Commerce business and and we look forward to providing an update later this year. Lastly, cost Efficiency we are realizing the benefit of investment made over the past several years while maintaining a strong focus on cost discipline. Costa will speak to this in more detail shortly. We are excited by our strategic direction and have shared our plans with our Board of Directors with their full support as we refine our three years outlook to drive earnings growth supported by a clear set of initiatives.
We expect to be in a position to share additional details in due course. Stepping back on Our strategic priorities are closely aligned with our financial framework and support our objective of driving adjusted Earnings Per Share growth through a combination of earnings growth and share repurchases. We are also announcing 10.2% increase to our dividend, reinforcing our commitment to deliver strong return to shareholders. As we enter fiscal 2027, we are very confident in our positioning and the opportunities ahead.
We expect adjusted Earnings Per Share growth to be in the high end of our long term financial framework supported by food sales, growth, margin expansion, cost discipline and improving in E commerce economics. In closing, fiscal 26 reinforced the resilience of our business and our ability to deliver strong results in a challenging environment. We remain focused on delivering value for our customers as well as consistent, sustainable returns for our shareholders.
With that, I'll turn it over to Kosta.
Kosta Pafernis
Thanks Pierre Good morning everyone. We are pleased with our performance in fiscal 26 as we delivered adjusted Earnings Per Share growth of 8.7% within our financial framework. As Pierre noted earlier, our core business delivered even stronger growth. We expect to build on this momentum in the years ahead. I'll begin with our fourth quarter results then turn to our fiscal 27 outlook including capital allocation and other income before closing off with some comments on our new company Strategy.
In the fourth quarter we delivered adjusted Earnings Per Share of $0.94 up 27% year over year reflecting good top line growth, operating leverage, higher contribution from other income, a favorable tax rate and share repurchases. Excluding fuel gross margin was flat versus last year. Stronger performance across our banners were largely offset by the mix impact from higher wholesale contribution and by higher supply chain costs including higher fuel prices.
While fuel introduces some variability, it remains manageable. We expect to deliver adjusted Earnings Per Share growth at the high end of our financial framework in fiscal 27. For fiscal 26, gross margin expansion of 14 basis points was in line with our medium term expectations of 10 to 20 basis points. On an annual basis, other income and share of earnings from equity investments contributed 49 million in Q4 modestly above our prior quarterly expectations due to transaction timing and on the full year this contribution was 129 million within our guidance range of 120 to 140 million.
Real estate contribution was almost $30 million lower or about $0.10 per share lower year over year. This highlights the increasing contribution of our core operations to overall earnings. Turning to sga, we delivered another quarter of operating leverage marking sequential improvements since the first quarter SG&A excluding depreciation and amortization as the percentage of sales improved by 31 basis points versus last year. This reflects a combination of factors with the most impactful being good top line growth, benefits from the January E. Commerce update and lower year over year incentive costs partially offset by higher labor costs and continued investment in business expansion. Our effective tax rate in Q4 was approximately 19.3% lower than last year at 25.2%. This was mostly due to non taxable capital items including a sales leaseback transaction with Crombie serving as partial assets where a change in deferred tax assets not recognized and the revaluation of tax estimates for fiscal 2027 excluding the effects of any unusual transactions or differential tax rates on property sales.
We continue to estimate that our effective income tax rate will be between 25% and 27%. Now I'll speak to some of our fiscal 27 expectations. Our capital allocation plans continue to be supported by our strong balance sheet and consistent free cash generation. Our business is generating a healthy amount of cash including about 1.3 billion of free cash flow before capex and we will continue to invest your capital wisely. In fiscal 26 we accelerated new store openings and we will continue that growth through our new three year strategy.
We expect fiscal 27 CAPEX to be approximately 850 million. About half is allocated to new stores and renovations, a quarter towards technology initiatives and business development projects, and the balance towards various areas including logistics and sustainability. As Pierre mentioned today we announced a 10.2% increase in Empire's quarterly dividend per share which brings our five year dividend CAGR to 10.1% and represents an increase in our dividends for the 31st consecutive year.
We also expect to renew our Normal Course Issuer Bid on or before June 25th consistent with the timing requirements of the TSX for approximately 9.6% of our public float. Consistent with prior years, we will remain active with this Normal Course Issuer Bid and we are maintaining a level of flexibility as we are open to capitalize on market opportunities like the recent Mehran transaction. In fiscal 27, we expect contribution from other income and share of earnings from equity investments to range from 90 million to 110 million as we continue to drive increased performance from our core retail operations.
Based on our current visibility, the quarterly cadence to this is about 15% in Q1, 15% in Q2, 25% in Q3 and 45% in Q4. As announced in January, we continue to expect approximately 95 million in annualized operating income improvement with Approximately one third of that reinvested into the business, including technology initiatives such as advanced analytics and also accelerating our new store expansion plans. In Q4, we began to realize initial benefits and expect to achieve run rate by mid fiscal 2027.
As Pierre mentioned, customers, stores and growth will be key drivers to improve top line and margin. But our financial framework also looks to deliver operating leverage across our core business. This will be achieved through the cost efficiency pillar of our company strategy. We see opportunities across strategic sourcing, supply chain optimization and also improving our spend across real estate, marketing and it. Some of the specific initiatives include electronic shelf labels and central kitchen investments amongst many others.
We expect to continue our momentum on cost control and to deliver operating leverage across fiscal 27, though this may not materialize in a straight line across each quarter. And finally, I want to emphasize that we expect adjusted Earnings Per Share growth for fiscal 27 to be at the high end of our financial framework of 8% to 11%. This outlook reflects our focus on strengthening our core operations under our new three year strategy along with expected contributions from adjacent pillars like Pharmacy and M and A. With that, I'll turn it back to Katie for your questions.
Katie Bryan (VP Investor Relations)
Thank you. Kafta Joelle, you may open the line for questions at this time.
OPERATOR
Thank you ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press Star followed by the 1. On your touch tone phone you will hear prompt that your hand has been raised. Should you wish to decline the polling process, please press Star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment please. Your first question comes from Vishal Sridhar with National Bank. Your line is now open.
Vishal Sridhar (Equity Analyst)
Hi, thanks for taking my questions. I just wanted to start off with the strategic rationale of the Merand acquisition.
Pierre St. Laurent (President and Chief Executive Officer)
Merand is a well known brand in Quebec, performing well in four stores. This opportunity came up and for us it was a very easy decision to make. It was a great strategy to enter into the discount and wholesale market and the acquisition costs was very affordable and for us it was the best way to enter this market with very minimal risk and we see a lot of growth, potential growth with that with very minimal cannibalization to our network. So this is meaningful for us.
We're very excited internally by this opportunities. It was not on the table a year ago, but when we saw that opportunity we jump in and we're pleased with that. So we expect the closing in the next few days and the team already working on the integration plan and how can we drive this business forward?
Vishal Sridhar (Equity Analyst)
Okay. And should we expect, should we expect that business to grow substantially by via with network growth? And I understand that the business was under protection in the Bankruptcy and Insolvency Act. So do you see a quick path to profitability for that business? And also is it you anticipate it being a Quebec only discount banner, is that correct?
Pierre St. Laurent (President and Chief Executive Officer)
It's early to talk about plan but I know they had a plan for expansion and I can tell you this is going to be accredited day one for us. So it will be profitable day one for us. And we will sit with the MERA team to look at their plan, to look at how we can support them in their growth. But we see meaningful potential growth with that business.
Vishal Sridhar (Equity Analyst)
Okay, thank you. And I just wanted to get your new management's perspective on pharmacy. How large is that business? And I noticed there's been an appointment in pharmacy as well in terms of management team. So how should we think about the growth of that business over time? And will it be organic? Will it be acquisition? Any thoughts you can provide would be helpful.
Pierre St. Laurent (President and Chief Executive Officer)
Okay, so we have a meaningful network. I mean over 400 pharmacy both in stores and standalone pharmacy with Lawtons. It's a pretty interesting business for us. As I said before, since 2017, it was not our focus. We, we had other priorities to fix the core business which is done. I made the decision early this year to elevate pharmacy at dlt. So Doug Nathanson is leading the pharmacy group as our lead for that. So pharmacy is top of mind for us. It's an area where we did not focus in the past and we see meaningful growth going forward in both performance and growth.
So we are very pleased with the results we had last year. But just by giving more focus to that business, we're very pleased with the progress we saw during the year and we're seeing more opportunity in the next fiscal. So to answer your question in terms of growth, we're seeing potential growing the existing network through new pharmacy in our new stores network because we're going to add more new stores as I said. So pharmacy will be part of the strategy.
So when we'll be able to do that, we will have a pharmacy in our new stores to grow the pharmacy network. We made meaningful investment in the past in the central field. So this is another opportunity for us to capitalize on past investment and we will continue to look at the small token acquisition as well as potential acquisition if it makes sense for us, if the price is reasonable, if the strategic Fit is there. So I think as I said in the past, we see meaningful growth opportunity in that business like we see meaningful opportunity to grow the discount business.
It's two area where we are underdeveloped in our mind and so there's a lot of room for us to grow without cannibalization. So that's why we're excited by the future in those two businesses. Pharmacy is definitely in a real world going to focus.
Vishal Sridhar (Equity Analyst)
Thank you.
Irene Nettel (Equity Analyst)
Your next question comes from Irene Nettel with RBC Capital Markets. Your line is now open. Thanks and good morning everyone. Could you provide some color around what you saw in terms of consumer buying behavior through the quarter? You know whether you saw an intensification of value seeking behavior as fuel prices went up and also how you're seeing your current cost environment with fuel places still, even though supposedly we have a
Pierre St. Laurent (President and Chief Executive Officer)
deal elevated, there's no one better than our chief customer officer to answer that question. I'll ask Luke to answer.
Luc Larchevec (Chief Customer Officer)
Thank you. Of course. Thanks. Thanks. Irene and Luke, you may jump in also if you want to at the end. But so I would say more of the same is how I would define Q4 versus Q3. So no meaningful change in the customer behavior. Our basket is up, our trips are stable, the inflation is very stable below CPI promo penetration remains the same. So really nothing to declare here on customer behavior. You talked about costs. So if I look at the submissions that we received from the suppliers compared to same period last year, it's actually less.
So there's no surge on cost increases coming from suppliers. And our position on fuel is very well known. So we're not accepting anything. It's too volatile, it's too unpredictable. But to your point, now there's an agreement apparently. So hopefully this will also put some relief to the customers as fuel prices should go down from now on.
Irene Nettel (Equity Analyst)
That's really helpful. Thank you. And then just a housekeeping question. Can you share what the benefit to the SG and A line was as a result of the changes on the cfc? Because I believe the benefit. You said the Benefits began in Q4 but you didn't quantify it. I don't believe.
Kosta Pafernis
Yeah, we benefited in the quarter, Irene, at the expectation that we set up about $50 million.
OPERATOR
Okay, thank you. Your next question comes from Michael Van Nuys with TD Cowan. Your line is now open.
Michael Van Nuys (Equity Analyst)
Hi, good morning. I wanted to ask about your E Commerce growth which was up I think 6%. This was reasonably below the 20% that your two public company peers reported. And I'm kind of curious as to how much of that might have been caused by scaling back of Vola's footprint in Calgary and what you're doing to ensure that you hold your share in the third party E commerce channels like Uber and Instacart that are growing faster than the industry.
Pierre St. Laurent (President and Chief Executive Officer)
Yes Michael, I think when we talk about the main cause of that sales growth tapering, it did come in because of their closure in Alberta. You know we had the partial offset with our rollout of DoorDash which was completed at the end of April. And you know, with regards to Voila overall we're still happy with the sales growth that we're delivering in our Customer Fulfillment Centers in Toronto and Montreal. It wasn't quite double digit but it was still solid.
You know and in terms of future quarters, we're not going to be commenting on where total E commerce growth will be but we're going to be assuming more contribution due to the DoorDash partnership. So you know, we're looking forward to more, more good things to come. As it relates to our E commerce strategy.
Michael Van Nuys (Equity Analyst)
Are you able to give us any sense as to how much of a drag we can expect the exiting of the or the closure of the Calgary CFC to cause or to have on your E Commerce growth over the next few quarters?
Pierre St. Laurent (President and Chief Executive Officer)
We don't have the exact number. We can come back to you but it's not that big. This is why we decided to close the cfc. But again we have to look forward and the plan to grow the E-commerce. So first of all Doordash joined us at the end of the quarter. So in April we did close the CFC and we have strong plan in place to drive growth now. We did focus on improving the economics in the last year so now it's behind us and we're going to drive growth and E commerce teams having very solid plan that we're presenting to our board right now.
They are in meeting and we're very, I would say we see the future growth very good. So that's, that's again it's, it's below our target. We expect more growth from E Commerce. Focus has been on improving the economics but, but when we look in the future we see a lot of potential to grow this business. We have a couple of initiatives on the table right now that are going to drive growth on a profitable way. Yeah, go ahead. You have another question?
Michael Van Nuys (Equity Analyst)
Well, I just wanted to, I just wanted to ask for a bit of clarity there on, on some of the trends within the E commerce because I'm curious As to whether the, the difference in the growth rates has, has something to do with like the channels, the discount versus the, the full service channel within E Commerce specifically.
Pierre St. Laurent (President and Chief Executive Officer)
I don't think there's a correlation we can make between discount E Commerce. Third party is growing. We see that. We see growth continue at a very high pace from third party E Commerce. So I don't think it's related to discount or full service. It's related to the E-commerce market more than anything else. And again into this quarter, it's below our expectation. The result we had in this quarter, to be honest, but there's nothing broken. Again, the focus has been on improving the economics.
Very pleased with how the team did handle that. They handled that really, really well. The team is focusing on driving profitable growth right now and the best is yet to come.
Michael Van Nuys (Equity Analyst)
Perfect. Thank you very much.
Pierre St. Laurent (President and Chief Executive Officer)
And if I may, Michael, we understand that is your last call with us. I wish you all the best on behalf of the entire Empire team. Thanks so much.
Michael Van Nuys (Equity Analyst)
Thank you. Thank you guys. It's been a pleasure.
Pierre St. Laurent (President and Chief Executive Officer)
Thank you, Michael. Thank you.
OPERATOR
Your next question comes from Chris Lee with Deshaun. Your line is now open.
Chris Lee (Equity Analyst)
Oh, good morning everyone. Costa, I just maybe have a couple of numbers questions for you. First, I want to confirm the EPS growth guidance. I just want to confirm that it does include other income and share of earnings from investments. Is that correct? I asked because the midpoint of your guidance for this year obviously implies a decline versus last year. So I want to make sure that that growth, 8 to 11% includes that decline.
Kosta Pafernis
It's all included. Yes.
Chris Lee (Equity Analyst)
Perfect. Okay. And then just on the gross margin, you know that it was negatively impacted by the wholesale mix. Are you able to sort of quantify how much that was in the quarter and then when will you start to lap that impact?
Kosta Pafernis
Yeah. So I won't comment on the first part of your question, but the lapping on the mix will be in Q2, so we'll lap it fully in Q1 and then Q2 being a full year.
Chris Lee (Equity Analyst)
Okay, that's great. And then my last question, I guess maybe for Pierre is can you comment just when you look at the new stores that have been open, you know, recently, how, how has the growth been versus your expectations?
Pierre St. Laurent (President and Chief Executive Officer)
We're pleased, we're pleased with. We did open Bomboys Longos discount, mostly discount. And it's in line with our expectation. Again, we are very picky in locations we need. I want. I'm a big fan of being disciplined on how we allocate capital and I don't nothing to mention. It's in line with our expectation. Market is soft in general, but honestly good reaction with every new stores opening and conversion in the last quarter. So it gave us confidence to continue and it gave us confidence to open more than 20 stores next year and 70 stores in the next three years. Most of them are discount.
Chris Lee (Equity Analyst)
Okay, great. Thanks very much and all the best.
Pierre St. Laurent (President and Chief Executive Officer)
Thank you.
OPERATOR
The next question comes from John Vampiro with Scotiabank. Your line is now open.
John Vampiro (Equity Analyst)
I wonder if you could share any observations about or or comments on cadence of SAM store sales through the quarter. Was the one and a half roughly stable through FQ4? Was there any volatility month to month and apologies if I missed it during your prepared remarks, but was there any color or any color you can add on discount versus conventional performance?
Pierre St. Laurent (President and Chief Executive Officer)
We continue to see a slight, slight better performance in full service and discount, but almost the same. So we're pleased by both formats. So it's not driven by discount, it's driven by both formats like it was last quarter. Last quarter I said that full service did deliver stronger same store sales and discount. And it's not because discount did not perform well. It's because year over year trend. Last year discount was very strong. Year over year was more challenging to beat was the opposite in full service and we continue to see that trend right now. So we continue to see strong performance in both format and both are contributing to our same store sales growth and we're expecting that to continue.
John Vampiro (Equity Analyst)
Okay, understood. I wanted to follow up on the prior question about the wholesale mix and just given that there is still some level of increased wholesale sales impacting gross margin expansion, is it fair to expect gross margin gains ex fuel in F27 could be on the lower end of the long term algo.
Kosta Pafernis
No, no, no. We fully expect to be able to deliver with our expectations of what we've said in the past. So I think it's. It's just a matter of us lapping these wholesale mixes. So that's, that's pretty much the commentary in terms of any forward guidance.
John Vampiro (Equity Analyst)
All right, understood. And then one last one. Returning to the topic of pharmacy, can you confirm growth in pharmacy for you is above the overall pace of growth for the retail business? And can you add or do you plan to add pharmacies to existing stores as part of your regular renovation plan?
Pierre St. Laurent (President and Chief Executive Officer)
Absolutely, absolutely. We have room to allocate capital to pharmacy if there's meaningful return in project that we have in front of us. Absolutely.
John Vampiro (Equity Analyst)
Okay, I'll pass it on.
Pierre St. Laurent (President and Chief Executive Officer)
Thank you.
OPERATOR
Your next Question comes from Etienne Ricard with BMO Capital Markets. Your line is now open.
Etienne Ricard (Equity Analyst)
Thank you and good morning. To circle back on Pharmacy, you mentioned the potential to improve the current network. So what do you think you can do better in pharmacy? And as you look at potentially expanding, what do you want to be best known for to customers in this segment?
Pierre St. Laurent (President and Chief Executive Officer)
Oh, again, just first of all, give love to that business will drive growth in both top line and bottom line. The team is. We have a very good team. We have dedicated leadership at the ELT level to drive that business. I did visit Central fulfilled recently. I did visit teams. They are very excited. So again, it will be driven by generating the benefit from the past investment we've made in central fulfill. So we will improve productivity and we'll give more time to pharmacists to give more personalized service to customers. That's the purpose of the central film. And we are seeing room to continue to grow that operation with investment we've made in the past. That's the first thing. The second thing is growth. Adding more Pharmacy in our new stores network, even going after small token acquisition in the market. The team is focusing on it right now.
So both growing top line and bottom line in productivity, it's going to improve our performance. And last year Pharmacy did overperform the rest of the business. And it's just the beginning. So we're encouraged by what we're seeing in front of us to drive that business in the next level. And Pierre, as you reflect on your
Etienne Ricard (Equity Analyst)
first six months as CEO, what would you say has been the most significant change to the culture and priorities of the company?
Pierre St. Laurent (President and Chief Executive Officer)
First of all, I love the culture of this company. Yesterday I did celebrate 35 years with this company. So I'm very attached to the culture of this company. It's a great culture, great people culture. People are the most important asset for us. But right now I think the challenge is to drive more performance. I'm passionate about performance. I said it before and I feel a strong support from the leadership team to drive performance of this company to the next level. And I see a lot of energy in the company to drive performance. So we have very strong assets, we have very strong presence across the country, a strong portfolio of brand. I'm just trying to bring this company at the levels the company deserves and strong asset, just optimizing things and driving growth.
I'm passionate about growth as well. I think as I said before, we did fix a lot of things in the past couple of years. It's behind us now. We can Focus on driving growth, driving performance more than ever. So I feel the energy internally. I feel the strong support from the leadership team and the strong support from our board of directors to drive the performance of this company. And it's exciting. I'm very excited. I'm having a lot of fun right now.
Etienne Ricard (Equity Analyst)
Awesome. Thank you very much.
OPERATOR
Ladies and gentlemen. As a reminder, should you have a question, please press star one. Your next question comes from Mark Feitre with cibc. Your line is now open.
Mark Feitre (Equity Analyst)
Yeah, thanks and good morning. I guess just a couple follow ups really. Maybe first Pierre, just on the store pillar, specifically hoping you can provide more detail on your priorities and the opportunities there specifically around, you know, the operations. You know, I think we all understand the shelf label opportunity, but just given your deep experience and expertise in operations, what changes should we expect to see and how material do you think that opportunity is?
Pierre St. Laurent (President and Chief Executive Officer)
It's, it's a big, it's a big portion of our business. You know, our stores is where most of our transactions are happening. And as I said, when we talk about stores priority, it's how can we make the life of our teammates in store easier. So we still have a lot of things or tasks that our teammates are doing are not adding value in the customer experience and those tasks are not necessarily fun to do by our teammates. So by focusing on simplifying their life, we believe we will improve the performance of the company. But more importantly, we are going to give room for our teammates to better serve customers and make the experience better. That's the focus we have right now. We're dedicated the entire leadership team to simplify stores, teammates life and to better serve customers.
And we strongly believe that because the service is part of the value equation, I said it before, value equation. It's a combination of multiple factors including price. Price is one of the most important ones, but it's not the only one. It's not one dimensional. The customer service, the emotional connection are equally important in the value equation. And this is a big focus for us going forward. It's a big focus for me. I strongly believe that it's where the magic happen is in store and we have banners in our network. They are doing extremely well. That and as I so in my leadership team, as you know, we have a great retailer, probably one of the best to drive the performance of our store. Jean Louis Bellemar is our retail executive at the ELT and is committed to create the same type of experience or better that we have in our farm boy stores.
And Farmboy is performing extremely well. So we're leveraging strength in business across the board. This is the goal we have. And having Ja Louis at the table with the entire leadership team with Julian Knox are going to be the chief retail officer and the team they're doing with our chief customer officer. It's where we will create the magic. It's nothing crazy but it's the fundamental of retail and it's with fundamental of retail we're going to win.
Mark Feitre (Equity Analyst)
Understood. Appreciate that. Also wanted to follow up on the SGA opportunity and cost efficiency. Would it be reasonable to expect leverage in fiscal 27 and would that even be the case if same store sales growth holds at the Q4 level, the 1.5%?
Kosta Pafernis
Yes mark. Our expectation is to continue to drive leverage. Really important, you know as we talk about our total sales growing at a bigger portion than our same store sales. But you know pressing forward with the areas that we've continued over the last couple quarters we've seen some meaningful improvements. You know there's been a lot that has gone into that as we look forward to our three year strategy. So we're happy with the cost control and you know I just want to reiterate that the expectation is for us to be able to push forward
Pierre St. Laurent (President and Chief Executive Officer)
especially around areas that relate to how we prioritize certain initiatives so that we can do better with the investments that we've made. That's a key message and the way we will achieve it. And Mark, the way we will achieve it. It's as I said we made a lot of investment in the past that we continue to see potential. So investment done, we have to focus on delivering benefit on it. So central fulfilled is a great example. We believe we can do better with that investment.
Investment we've made in stores, investment we've made in tools and processes, in merchandising for example and in store. We strongly believe investment is behind us now it's time to capture the benefit. More sales are going to give us leverage. We strongly believe that. And the focus focus on being efficient with every dollar we spend and internally we have four strategic pillars and it's the filter with every decision we make. If it's not good for stores, we won't do it.
If it's not good for stores, it's not simplifying stores life, it's not driving growth. We won't do it. We will do meaningful investment according to that focus. Less is more and we strongly believe this is going to drive ESGN in the right direction.
Mark Feitre (Equity Analyst)
Yep. Okay, appreciate that. And then my last follow up just specifically around the plan for new stores, 20 new in fiscal 27, I assume maybe 25 each year in the following two years. I think you said that skews to discount, but could you just give us maybe a more specific number for fiscal 27 and then does that mix change in 28 and 29, or is it still about the same?
Pierre St. Laurent (President and Chief Executive Officer)
About the same. As we said before, I think more than 75% of the new stores are going to be discounted. But you will see new opening in Farmboy and Longos and IG because there's room to grow. There's new development where we believe full service is the best format for that neighborhood. So Farmboy is doing extremely well. Longo's is going to open a new store next week. Farmboy just opened the store today. IG is going to open two new stores next year.
So it's a combination of all our formats, but more than 75% are going in discount because discount is a white space for us. We have a lot of room to grow in discount without cannibalization of our network.
Mark Feitre (Equity Analyst)
Yeah, okay. But that doesn't include any new pharmacies. Is that right?
Pierre St. Laurent (President and Chief Executive Officer)
In that 70 new stores, no pharmacy? We will provide more details in the future, but you should expect seeing growth in the store counts as well.
Mark Feitre (Equity Analyst)
Yeah. Okay. Okay. Appreciate that, and all the best.
Pierre St. Laurent (President and Chief Executive Officer)
Thank you.
OPERATOR
There are no further questions at this time. I will now turn the call over to Kayte for closing remarks.
Katie Bryan (VP Investor Relations)
Thank you, Joelle. We appreciate your continued interest in Empire. If there are any unanswered questions, please contact me by phone or email. We look forward to having you join us for our first quarter fiscal 2027 conference call on September. Talk soon.
Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice.
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