Initiatives Drive Metro Gains

MONTREAL Quarterly and annual increases in sales and earnings validated Metro Inc.'s ongoing adoption of customer centric strategies, officials of the retailer here said last week. Net earnings improved 8.7% to $91 million (U.S.) for the fourth quarter and 10.4% to $383 million for the fiscal year, which ended Sept. 25. Quarterly sales of $2.5 billion (U.S.) improved 1.1% from the same period a year

MONTREAL — Quarterly and annual increases in sales and earnings validated Metro Inc.'s ongoing adoption of “customer centric” strategies, officials of the retailer here said last week.

Net earnings improved 8.7% to $91 million (U.S.) for the fourth quarter and 10.4% to $383 million for the fiscal year, which ended Sept. 25. Quarterly sales of $2.5 billion (U.S.) improved 1.1% from the same period a year ago, while comparable-store sales improved 0.5%. Annual sales of $11 billion increased 1.3%.

The results came amid price deflation, rising unemployment and a slowing economy in Canada, Metro officials noted. Effects of a joint-venture with the data mining firm Dunnhumby as well as a loyalty program introduced earlier this year in Quebec have begun to help Metro succeed amid those trends, said Eric LaFleche, president and chief executive officer, said during a conference call discussing results.

“Despite experiencing deflation for most of the year, the company was able to increase sales, margins and net earnings, driven by improved execution, effective merchandising and good cost control,” LaFleche said. “The challenges of this marketplace reinforce our conviction that adopting a customer-first strategy is the right way to go.”

LaFleche said the Dunnhumby partnership is “having a positive effect overall,” but declined to say whether the venture — which uses loyalty card data to market to the chain's best customers — had delivered an impact on margins yet. “It's a long-term process, but we're one year into it and so far, so good,” he said. “It's a new language, it's a new way of merchandising. Our teams are adapting to it with the Dunnhumby people and our vendors are buying into it, so its very positive and we're looking for more in the future.”

LaFleche said Metro would invest about $225 million for store expansions and renovations during fiscal 2011, with a particular focus on stores in Quebec. In Ontario, where Metro completed a conversion of several acquired banners into the single Metro chain, multiple initiatives are under way to improve perishable presentations.

“We're not thrilled with our customer perception in produce in general,” LaFleche admitted. “We have good initiatives on the way already to raise the bar.”

LaFleche declined to elaborate in detail on those plans but mentioned the effort would include processes for ordering, equipment and labor scheduling.

Creating a good fresh store, he said, “sounds easy, but it's a complex process involving a lot of people. We have put something together that I think will give us a good result, but it won't happen overnight.”