Canada grocer braces for higher wages

MONTREAL — Canadian grocer Metro Inc. is bracing for as much as $39.2 million in additional costs next year because of a minimum wage increase in Ontario.

The Montreal-based company said it’s reviewing how to mitigate the impact of the measure on growth as it reported a decline in same-store sales and earnings that missed estimates. Profit for the third quarter ended July 1 rose to 61 cents a share, missing analysts’ average projection of 62 cents.

Metro, which operates both discount and regular supermarkets in Quebec and Ontario, has been using price cuts to get shoppers to spend more and offset the impact of food deflation. Its cost discipline has also helped support profit growth.

More penny pinching will be required as Metro and competitors such as Loblaw Cos. and Wal-Mart Stores Inc. face a 32 percent increase in the minimum wage in Ontario over 18 months, from the current $8.94 to $11.76. Longer term, Amazon.com Inc.’s acquisition of Whole Foods Market Inc. also has investors worried about increased competition in the home delivery market.

Metro shares have lost 3.5 percent since June 15, the eve of the Amazon announcement. Loblaw has lost 9.1 percent. Loblaw said last month that the wage increases in Ontario and Alberta — where the minimum wage will rise to $10.66 in October and to $11.76 in October 2018 — will cost an extra $149 million.