An extra selling week and a lower tax rate were factors in the higher annual profits at Sobeys, the holding company for the Canadian retailer has announced.

Empire Co. said yesterday (30 June) that Sobeys recorded a 2.7% increase in net earnings to C$269.9m (US$280.4m) for the year to 7 May.

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The improved net earnings came from an increase in Sobeys’ earnings before capital gains and “other items”, which included costs linked to the closure of stores and a distribution centre in Ontario. 

Earnings before capital gains and other items were up 8.8% at C$278.7m thanks to a rise in operating income – which climbed 4.8% to C$445.8m – and from the extra selling week and the lower tax rate.

However, including the costs linked to the Ontario closures, Sobeys reported operating income of C$430.7m, down from C$430.8m last year.

Nevertheless, the retailer’s sales climbed 3.4% to C$15.76bn. Empire said 2.1 percentage points of the increase was due to the financial year including an extra week.

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Sobeys’ same-store sales increased 0.2% during the year. Empire said the retailer had seen food prices fall during parts of the year. “No inflation was experienced in the fourth quarter,” Empire said. Sobey’s fourth-quarter same-store sales rose 1%.

Empire added: “Sobeys expects sales growth to continue in fiscal 2012 as a result of continued capital investment in its retail store network and [the] offering, merchandising, pricing and operational execution improvements across the country.”

Click here for the full release from Empire Co.