Metro marks end of ‘transition year’ with slight drop in profits

Grocery and pharmacy retailer Metro Inc. ended its “transitional year” with a fourth-quarter profit of $219.9 million, with a supply chain transformation of nearly $1 billion in the rearview mirror and plans to increase its store presence in the coming year.

“This transformation will provide capacity for future growth and efficiencies while strengthening our market position,” President and CEO Eric La Flèche said during a conference call with analysts.

“With significant investments in modernizing our supply chain behind us, we are well positioned to grow and create long-term value… for shareholders.” »

The company behind Metro grocery stores and Jean Coutu pharmacies said its profit was down slightly from $222.2 million in last year’s fourth quarter, which included an extra week but also included a strike which cost the company approximately $27 million after taxes.

Metro launched a major supply chain transformation project in 2017, with a new automated fresh and frozen distribution center in Terrebonne, Quebec; an expansion of the fresh produce distribution center in Laval, Quebec; and two new automated distribution centers in Ontario, one for frozen products and one for fresh products.

The final piece of the puzzle, the second phase of the Ontario Fresh Produce Facility, was recently finalized, La Flèche said.

The company opened nine new grocery stores during the fiscal year, said CFO François Thibault, including three conversions at Super C, the company’s discount chain in Quebec. The company also made major expansions and renovations at 11 food retail stores, he said, and relocated two others, increasing the total footprint of the store network. 1.5 percent.

La Flèche reported that Metro also undertook 28 major renovations over the past year in its pharmacy network. He indicated that 30 major projects are planned for its pharmacies in 2025, including 12 expansions and 18 renovations.

In the coming year, Metro plans to open 12 new discount stores, including some conversions, he said.

Metro launched its new Moi Rewards program in Ontario during the quarter, and La Flèche said the response has been good so far, with more than a million signups in less than four weeks.

The company’s discount stores continued to outperform the overall store network during the fourth quarter, La Flèche said, although it said the gap between discount and market stores was narrowing.

He said Metro sees opportunities to expand its discount network in Ontario and Quebec.

“Promotion penetration increased again this quarter compared to last year, and private label sales continue to outpace national brands” as shoppers continue to look for sales and discounts, La Flèche said .

The company also saw its online grocery sales increase by 27.6 percent compared to the comparable 12-week period last year.

This has been “fueled by partnerships with third parties for same-day delivery and the continued expansion of our click and collect service to our discount banners,” La Flèche said.

This service has been rolled out at Super C in Quebec and is underway at Food Basics in Ontario, he said, with more additions planned in the coming year.

La Flèche said Metro’s fourth-quarter profits were in line with expectations.

Earnings were 98 cents per diluted share for the quarter, compared with earnings of 96 cents per share a year earlier when there were more shares outstanding.

Sales during the 12 weeks ended September 28 totaled $4.94 billion, compared to $5.07 billion for the 13 weeks ended September 30, 2023.

Same-store grocery sales for the quarter increased 2.2 percent.

Pharmacy same-store sales increased 5.7 percent, helped by a 6.8 percent increase in prescription drugs and a 3.3 percent increase in in-store sales, primarily driven by in-store products. over-the-counter, cosmetics and health and beauty.

On an adjusted basis, Metro said it earned $1.02 per diluted share in its most recent quarter, compared to adjusted earnings of 99 cents per diluted share in the same quarter last year.

Metro said in its earnings release that it expects to gradually resume earnings growth in fiscal 2025 and maintained its annual growth target of between 8 and 10 percent in adjusted earnings per share in the mid to long term.

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