Metro reports $219.9M fourth-quarter profit as ‘transition year’ comes to a close

Grocery and drugstore retailer Metro Inc. ended its “transition year” with fourth-quarter earnings of $219.9 million, with an almost $1-billion supply chain transformation in the rearview mirror and plans to grow its store footprint in the coming year.

“This transformation will provide capacity for future growth and efficiency while strengthening our market position,” said president and chief executive officer Eric La Flèche on a conference call with analysts.

“With the significant investments in the modernization of our supply chain behind us, we are well-positioned for growth to create long term … shareholder value.”

The company behind Metro grocery stores and Jean Coutu drugstores said the earnings were slightly down from $222.2 million in the fourth quarter last year, which included one more week but also included a labour strike that cost the company about $27 million after tax.

Metro began a major supply chain transformation project in 2017, with a new automated fresh and frozen distribution centre in Terrebonne, Que.; an expansion of the fresh produce distribution centre in Laval, Que.; and two new automated distribution centres in Ontario, one for frozen products and one for fresh.

The final piece of the puzzle, the second phase of the Ontario fresh facility, was recently finalized, La Flèche said.

The company opened nine new grocery stores during the fiscal year, said chief financial officer François Thibault, including three conversions to Super C, the company’s discount chain in Quebec. It also carried out major expansions and renovations at 11 food retail stores, he said, and relocated another two, increasing the store network’s total footprint by 1.5 per cent.

La Flèche said Metro also undertook 28 major renovations this past year in its pharmacy network. He said there are 30 major projects 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 a few 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 enrolments in less than four weeks.

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

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

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

The company also saw its online food sales grow 27.6 per cent versus the comparable 12-week period last year.

This was “fueled by third-party partnerships for same-day delivery and the ongoing expansion of our click-and-collect service to our discount banners,” said La Flèche.

That service has been deployed at Super C in Quebec, and is in progress at Food Basics in Ontario, he said, with more additions planned in the coming year.

La Flèche said Metro’s earnings for the fourth quarter came in as expected.

The profit amounted to 98 cents per diluted share for the quarter compared with a profit of 96 cents per share a year earlier when it had more shares outstanding.

Sales in the 12-week period ended Sept. 28 totalled $4.94 billion compared with $5.07 billion for the 13-week period ended Sept. 30, 2023.

Food same-store sales for the quarter were up 2.2 per cent.

Pharmacy same-store sales rose 5.7 per cent, helped by a 6.8 per cent increase in prescription drugs and a 3.3 per cent rise in front-store sales, primarily driven by over-the-counter products, cosmetics and health and beauty.

On an adjusted basis, Metro said it earned $1.02 per diluted share in its latest quarter compared with an adjusted profit of 99 cents per diluted share in the same quarter last year.

Metro said in its earnings release that it expects to gradually resume its profit growth in fiscal 2025, and maintained its annual growth target of between eight and 10 per cent of adjusted earnings per share over the medium and long term.

This report by The Canadian Press was first published Nov. 20, 2024.

Companies in this story: (TSX:MRU)

Rosa Saba, The Canadian Press