Security breach at Sobeys net earnings of $25M
Empire Co.’s parent company Empire Co. will suffer losses of $25 million due to the cybersecurity attack that shut down Sobeys’ pharmacy operations for four consecutive days last month. Empire Co. booked an increase in profit.
Empire, Canada’s second-largest grocery chain, which owns Sobeys and Freshco, IGAs, Farm Boy, Safeway and IGAs, said Thursday that an “cybersecurity incident” caused the IT system issue that started on Nov. 4. Empire, Canada’s second largest grocery chain, did not give any additional information about the incident. It didn’t say whether it was a ransom demand, what the financial impact was on operations or whether customer data was compromised. The company revealed that the incident will have a $25 million impact on net earnings.
Empire chief executive officer and president Michael Medline spoke to analysts on Thursday. He stated, “This event and the precautionary response did cause some temporarily problems.” He explained that pharmacy operations were temporarily shut down for four consecutive days. Some in-store services also suffered from the incident, including self checkouts, gift cards, redemption of Scene plus loyalty point and redemption of Scene credit.
Medline stated that “this has been a difficult time in our teams’ lives.”
“There were many workarounds and in the moment solutions that helped us get through. Many of these were created and implemented by our amazing frontline teams.”
Empire issued a brief statement on the incident on Nov. 7 stating that its store network was affected by “IT systems issues” that caused technical problems with certain in-store functions. Medline claimed that Thursday’s statement was “as specific and precise as we could make due to security reasons.”
While the company is still assessing its impact, it stated that the incident will cause a 25 million dollar drop in net earnings. This includes “certain business losses”, increased labour costs and legal expenses.
Chief financial officer Matt Reindel stated that this event “has reinforced the importance the investments made in cybersecurity as well our future investments in IT system people.”
Empire’s second quarter results were released Thursday, two days after the cybersecurity incident occurred. The impact of this incident was minimized by Empire. The quarter ended Nov. 5, with net earnings of $189.9million, or 74c per share. This is an increase from the $175.4 million or 66c per share in the same quarter last.
Sales for the quarter increased by $7.64 Billion to $7.32 Billion last year.
The company also announced it reached a definitive deal with Shell Canada to purchase all 56 of its Western Canada stations for $100 million.
Alicja Siekierska, a senior reporter at Yahoo Finance Canada, is Alicja Siekierska. Follow her on Twitter @alicjawithaj.