February 22nd, 2024

Price increases coming to Metro stores as industry price freeze ends: CEO

By Rosa Saba, The Canadian Press on January 30, 2024.

Metro Inc. reported a first-quarter profit of $228.5 million as its sales gained 6.5 per cent and raised its dividend. A Metro grocery store is seen Tuesday, January 31, 2012 in Montreal. THE CANADIAN PRESS/Paul Chiasson

MONTREAL РPrice increases will start coming to Metro Inc. grocery stores as soon as next week, as an industry-wide blackout period on supplier price increases comes to an end, CEO Eric La Fl̬che said Tuesday.

“We are negotiating as best we can and delaying as much as we can some of the increases requested by our suppliers,” La Flèche told a virtual news conference.

“Unfortunately, there will be some prices starting to go up.”

La Flèche said one product that Metro shoppers will pay more for will be orange juice, because of problems with orange crops.

“That one’s going to be substantial,” he said. “So we’re clearly going to be selling a lot less orange juice.”

However, La Flèche offered some hope for future stability, saying the number of requests for price increases by suppliers is down substantially from the highs of last year and the year before.

“So that’s good news,” he said. “And the size of the demands is coming back to more normal levels.”

The comments came as the grocery and drugstore retailer reported a first-quarter profit of $228.5 million, with sales up 6.5 per cent.

Metro said its profit amounted to 99 cents per diluted share for the quarter ended Dec. 23 compared with a profit of $231.1 million or 97 cents per diluted share a year earlier when the company had more shares outstanding.

Sales for the 12-week period totalled $4.97 billion, up from $4.67 billion in the same quarter a year earlier that ended on Dec. 17, 2022.

Food same-store sales were up 6.1 per cent, helped in part by the timing of the end of the quarter relative to Christmas. Adjusting for the Christmas week shift, Metro said food same-store sales were up 3.4 per cent. Pharmacy same-store sales were up 3.9 per cent.

La Flèche said Metro’s discount store banners continued to fuel growth, while the company’s private-label brands are reaching record penetration levels.

Grocery inflation in Canada has been moderating under the weight of interest rate hikes, but is still elevated at 4.7 per cent in December.

Metro’s internal measure of inflation at its stores was below that in its latest quarter at four per cent, said La Flèche, and down from the previous quarter.

In its outlook, Metro continued to say it expected significant headwinds in 2024 with the launch of its automated distribution centre in Terrebonne, Que., and the launch of the final phase of its automated fresh produce plant in Toronto next spring.

It says it expects some temporary duplication of costs and learning curve inefficiencies, as well as higher depreciation and lower capitalized interest.

The company maintained its guidance for operating income before depreciation and amortization to grow by less than two per cent and adjusted net earnings per share to be flat to down 10 cents in its 2024 financial year compared with 2023.

On an adjusted basis, Metro says it earned $1.02 per diluted share, up from an adjusted profit of $1 per share a year earlier.

Metro said Tuesday it will pay a quarterly dividend of 33.5 cents per share, up from 30.25 cents per share.

This report by The Canadian Press was first published Jan. 30, 2024.

Companies in this story: (TSX:MRU)

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