Metro is facing supplier pressure
Canadian grocery giant Metro Inc. is already facing pressure from suppliers to accept higher prices in light of a recent tariff war with the United States and consumers should expect slightly higher food bills in the future, its CEO said Wednesday.
“We’re starting to get demands from some suppliers who are, whose products will be, affected by the new tariffs,” Eric La Fleche said during a conference call with analysts Wednesday after the company released its third-quarter earnings report.
The Canadian government implemented tariffs on a number of American-made goods, including yogurt, orange juice and maple syrup, in retaliation for U.S.-government imposed tariffs on Canadian steel and aluminum products, which are also putting pressure on some Canadian food manufacturers.
Metro is currently reviewing suppliers demands and negotiating prices, La Fleche said.
“If it’s legitimate and if it’s industry-wide, sometimes we won’t have a choice and we will have to accept,” he said, adding the company has already agreed to some minor cost increases.
Metro will continue to ensure its retail prices are competitive, he said, but expects the company, as well as the market as a whole, will have to accept some cost increases.
Ontario’s new minimum wage, which rose to $14 at the start of the year, is adding extra pressure on prices.
“We expect that the cumulative effect of all these cost pressures should start to be reflected at retail,” he said. “We’re just starting to see some minor price increases — nothing major.”
Empire Co. Ltd., which operates subsidiary Sobeys Inc., predicted a similar outlook in late June, when the company reported its latest quarterly earnings. Sobeys CEO Michael Medline said at the time that the pending tariffs could result in higher grocery store prices, though he said the company would try to resist accepting suppliers’ cost increases.
A number of companies whose products use cans, including the Campbell Company of Canada and Molson Coors Brewing Company, have said that the 10 per cent tariffs the U.S. has slapped on aluminum imports have forced them to consider price increases.
The CEO’s comments came as the company reported lowerthan-expected earnings in its latest quarter.
The company earned $167.5 million, or 69 cents per share, in the third quarter ended July 7, as it completed its acquisition of the Jean Coutu Group on May 11, falling from a profit of $183 million or 78 cents per diluted share a year ago.