Thursday, January 26, 2017
By Peter Diekmeyer
MONTREAL – At Metro Inc.’s annual general meeting, which took place in conjunction with the release of its first quarter earnings on Tuesday, the company announced that Q1 2017 sales increased 0.3 per cent while same-store sales showed modest growth of 0.7 per cent. Total net earnings for the three-month period ended December 17, 2016, decreased 1.2 per cent.
Despite modest sales growth, and excluding a lower Alimentation Couche-Tard contribution, fully diluted net earnings per share actually increased 3.6 per cent, reinforcing Metro’s position as the most efficient grocery operator in the country.
During the meeting Metro president and CEO, Eric La Flèche, provided analysis on key issues affecting the business, noting that the stronger U.S. dollar will negatively affect import prices.
Food deflation, which hit one per cent during the first quarter, will continue to be a factor throughout the early part of the year, La Flèche said. However, he noted that procurement savings are being passed directly to customers. “You have to,” said La Flèche. “It’s very competitive out there.”
Metro will tighten operations to boost earnings, a process that La Flèche said could involve more of a focus on private-label products – a category that performed well last year.
A $350-million capital expenditure budget, including the expansion of online, will also be part of the mix. La Flèche noted a desire to expand both the Adonis and Première Moisson banners, including the latter’s in-house bakeries.
La Flèche mentioned the possibility of ending the company’s “rocky” relationship with Air Miles, whose loyalty cards the Quebec grocery chain accepts in its Ontario stores.
In a meeting with journalists following Tuesday’s annual general meeting, La Flèche spoke about the negative client feedback that Metro had received following last year’s Air Miles points redemption backlash.
One alternative could involve extending, into Ontario, the Metro & Moi (Metro & Me) cards, currently used by about half of Quebec households. “There are large costs associated with switching,” La Flèche admitted. “It’s a big decision.” Metro Inc. has issued 1.6 million of the wildly popular Metro & Moi loyalty cards since they were launched in 2010.
Metro’s deal with Air Miles has its roots in a contract the grocer inherited following the acquisition of A&P’s Canadian operations. Metro subsequently renewed the deal several times.