Metro Inc. reported sales of $3.7 billion for the fourth quarter of 2018, an increase of 15.7 per cent.
“We are pleased with our results, ending the year on a strong note and delivering solid growth on pretty much all key metrics,” said president and CEO Eric R. La Flèche. “Food same-store sales grew by 2.1 per cent in a very competitive market. Food inflation increased slightly during the quarter as our internal food basket was 0.8 per cent, up from 0.5 per cent in the third quarter.”
When the acquisition of the Jean Coutu Group is taken into account – along with the fact that the third quarter of 2017 included a 13th week – 4Q sales are up 2.5 per cent.
For the 2018 fiscal year, sales were $14.38 billion, an increase of 9.2 per cent. With the Jean Coutu acquisition and the extra week in 2017 taken into account, the sales increase comes to 2.4 per cent. (The impact of the extra week represents about $258 million in sales and $11.9 million in net earnings.)
The Jean Coutu Group acquisition was completed on May 11, with the result that Jean Coutu Group results were consolidated with Metro Inc. results for slightly more than 20 weeks. During this period, Metro says, synergies of $6.6 million were generated. The annual run rate is now $17 million, said François Thibault, executive vice president and CFO. La Flèche added that the three year figure is on track to reach $75 million.
During the fourth quarter Metro Inc. recorded pharmacy network closure and restructuring expenses of $23.0 million after taxes, resulting from the forthcoming transfer of operations from the McMahon warehouse to the Jean Coutu Group warehouse, the reduction of administrative positions, the closure of three Brunet drugstores and the divestiture of 10 drugstores.
"With the acquisition of the Jean Coutu Group, fiscal 2018 was a pivotal year for the Corporation that ended on a strong note with solid growth in same-store sales and adjusted net income in the fourth quarter,” said La Flèche. “The integration work is progressing well and we are confident in our ability to realize the full potential of this promising business combination."
Infrastructure investments include new automated fresh and frozen DCs in Toronto, scheduled to begin construction early next year. E-commerce sales continue to grow in Quebec, with a similar service slated for launch in Ontario next year.
“We are feeling positive about our prospects for fiscal 2019 as we will soon lap significant cost headwinds, food inflation seems to be returning to more normal levels, and the industry's square footage growth remains modest,” La Flèche concluded.
A transcript of the earnings call is available here.