Metro Boosts Sales, Earnings in Deflationary Q2

Improved store conditions and better execution in shrink helped Metro Inc. overcome what it viewed as the peak of food-price deflation during the second quarter, the retailer here said.

MONTREAL — Improved store conditions and better execution in shrink helped Metro Inc. [3] overcome what it viewed as the peak of food-price deflation during the second quarter, the retailer here said.

Overall customer counts were up slightly in the quarter, but average basket size decreased as deflation for the basket averaged about 2% during the quarter, which ended March 13, Metro officials said.

Quarterly net earnings of $80.5 million (U.S.) improved by 5.2% form the same period last year and sales of $2.6 billion improved 1.1%, despite realizing benefits the previous quarter of a competitor strike and high product price inflation.

In a conference call discussing results, Eric LaFleche, president and chief executive officer of Metro, said the chain is already deriving benefits from a newly announced partnership with the loyalty firm Dunnhumby. “They are helping us in the merchandising mix, flyer, promo, assortment pricing — the basics of food merchandising,” he said.

LaFleche described the competitive environment as “aggressive,” but said retailers have been cautious to fight for sales in the current deflationary environment. He estimated inflation could return to normal levels in the fall.

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