BREATHER FOR FOOD PRICES
Metro records higher earnings and expects food inflation to ease in the coming weeks,
Shoppers at Metro Inc. stores can expect to see food inflation easing in the coming weeks as local fresh produce becomes more available, said Metro Inc. CEO Eric La Flèche says.
“We’ve been passing through inflation while offering good value and that is reflected in our higher traffic and our higher sales,” said La Flèche, speaking Wednesday on a conference call following the release of the company’s second-quarter earnings.
“We anticipate inflation to lessen in the coming quarters.”
Metro earned $124.9 million or 51 cents per diluted share for the quarter, compared with $111.6 million or 43 cents per diluted share a year ago.
Sales grew to $2.88 billion, up from $2.71 billion.
According to Statistics Canada, shoppers paid 3.9 per cent more for food in February compared with the same time last year. Higher prices for fresh produce contributed the most to the increase.
Despite that, customer traffic at Metro stores increased in the quarter ended March 12, and customers were buying more.
Same-store sales, which measures sales at stores open more than a year, increased by 5 per cent. It was the strongest increase in same-store sales since 2009.
La Flèche said capital investment in stores is paying off and the loss of competitor Target, which shuttered operations last spring, also helped.
“The fact that the industry squarefootage has moderated quite a bit in the last year is also a positive factor and we’ll see how that evolves going forward,” La Flèche said.
Metro has more than 600 grocery stores under several banners, including Metro, Metro Plus, Super C and Food Basics.
It also has more than 250 drugstores under the Brunet, Metro Pharmacy and Drug Basics banners.
In the first 24 weeks of the year, Metro opened three stores and carried out major renovations and expansions on 14 stores and closed others, for a net increase of 42,000 square feet.
More stores are planned in the coming months, La Flèche said.
Promotional activity in the sector remains high, he added.
“There’s always skirmishes in certain areas that can happen. Recently meat pricing has been quite aggressive, given the cost of that commodity these days,” he said.
The company’s share of earnings in Alimentation Couche-Tard was $21.2 million for the second quarter of 2016 versus $16.3 million
During the last 24 weeks, it was $51.8 million versus $34.2 million in 2015.
“I don’t think it’s a one-quarter wonder,” La Flèche said of the robust second-quarter earnings. “We’ve had steady same-store-sales growth for several quarters now. “I think we have good momentum . . . and I think we can sustain that.” With files from The Canadian press