Within a very competitive market, Metro Inc. posted a solid Q4 performance. Same store sales were up and the shopping basket grew, which offset a slight decrease in traffic in the quarter.
The company noted that competitive pressures are increasing and the effect of increased square footage over the 18 months is being felt.
In the wake of the increase in the Ontario minimum wage, Metro announced that it was working to manage labour costs, so some stores now open 24-hours will see reduced hours. The company also noted that it would be investing $400 million in its Ontario distribution network over the next six years.
During the analysts’ call, Metro also announced that it plans to expand e-commerce capability in the Ontario market in late fiscal 2018. “There is clearly a preference for home delivery,” as Metro’s experience in Quebec has shown, said president and CEO Eric La Flèche.
Commenting on the Competition Bureau investigation, Metro said that if suppliers are giving a rebate to one of their competitors, the company will expect the same. "We want fair and equitable treatment."
Metro said it maintains a positive outlook particularly as it works to more fully realize the benefits of the Jean Coutu purchase.
Metro Inc. says it earned $154.9 million in its fourth quarter, up from $145.0 million one year ago.
Sales totaled $3.23 billion, up from $2.93 billion, while same store sales gained 0.4 per cent. Metro's food basket experienced a "slight inflation" of about 0.3 per cent compared to deflation in the three previous quarters, noted Metro in a press release.
"We delivered positive same-store sales and earnings per share growth in the fourth quarter in a very competitive market," stated La Flèche. "While our industry will be facing significant challenges in 2018, we are confident that we will continue to grow by executing our customer-first strategies and sustained investments in our network and supply chain.
"On October 2, 2017, we announced a business combination agreement with The Jean Coutu Group and then completed the sale of the majority of our Alimentation Couche-Tard holding to finance, in part, this acquisition. Over the next few months, our teams will be actively working on making this major acquisition a success that will strengthen our leadership position to better meet our customers’ evolving needs in food, pharmacy, and health and beauty."
Metro stated in a webcast that it's working hard to increase productivity and lower costs and La Flèche stated "we are confident we will continue to grow."
Excluding the extra week and $2.5 million before taxes related to its acquisition of Quebec-based pharmacy chain Jean Coutu Group Inc. and the modernization of its distribution network in Toronto, Metro says its earnings would have been similar to last year, while diluted net earnings per share would have been up 1.7 per cent.
Metro announced a friendly deal last month to acquire Jean Coutu Group in a $4.5-billion takeover offer.
The combined company will have more than 1,300 stores in Quebec, Ontario and New Brunswick and about $16 billion in annual revenues.
With files from CP Press