Metro reports strong food sales despite frowns at checkout
Food giant’s CEO expects fruit and vegetable prices to ease after ‘this long winter’
Metro Inc. reported strong food sales amid higher prices for fresh fruit and vegetables in its most recent quarter, though the company expects produce costs to moderate close to summer.
“Normally we would expect produce inflation to level off as we start buying more locally, but we’re not there yet, especially with this long winter,” said CEO Eric La Fleche during a conference call with analysts Wednesday.
The grocer’s internal measure for food inflation rose 2.5 per cent over the 12 weeks ending March 16, while its food samestore sales, a key retail metric, moved up 4.3 per cent.
La Fleche said he expected inflation on produce to be closer to 2 per cent for the remainder of the year. “But we don’t have a crystal ball,” he said.
However, La Fleche noted that there are also signs of meat inflation down the road, pointing to China’s issue with pork production as it grapples with an outbreak of African swine fever in its pig population.
It’s hard to say whether that will have a domino effect on other meat prices, he said.
So far, the company has found it pretty manageable to protect its profit margins by mixing up its product offering, he said.
Metro also said it is piloting its delivery offering in Toronto and expects to launch in the Greater Toronto Area in the next few weeks. The company already operates so-called click-and-collect and home delivery services in Quebec. The comments came as the grocery-and-pharmacy chain said it earned $121.5 million or 47 cents per diluted share during its second quarter, up from a profit of $106.9 million or 47 cents per share a year ago. Sales totalled $3.7 billion, up from $2.9 billion. Excluding the Jean Coutu Group, Metro said sales were up 4.0 per cent compared with a year ago. Pharmacy same-store sales gained 1.1 per cent.