MONTREAL — Canadian retail Metro here said deflationary pressure from competition ate into sales in the second fiscal quarter, although the company was able to post a 3.7% gain in earnings for the period.
“We are satisfied with the growth of our net earnings in the second quarter, although sales continued to be affected by food price deflation and lower drug pricing,” said Eric R. La Flèche, president and chief executive officer. “Despite the difficult competitive environment, we are confident that we will continue our growth due to our effective merchandising, loyalty, and cost control programs.”
Net income for the 12-week quarter, which ended March 12, totaled about $87 million (U.S.), on sales of about $2.68 billion, down 0.4%. Same-store sales were up 0.2%.
For the 24-week, year-to-date span, net income of $183 million was down 1.7%, on a 0.5% decline in sales, to $5.35 billion.
“Consumer behavior remains generally cautious, and we expect the recent fuel price increases will add to this caution,” La Flèche said.
He also said the company's new “Metro & Moi” loyalty program in Quebec has exceeded its targets.
“Enrollment, card penetration and basket size are all increasing steadily,” he said. “We're getting them to spend more in our stores.”
He also said sales in private label are “increasing nicely.”
“We're very focused on healthy products, gluten-free products, better-for-you products, so that's the focus these days of our folks in private label,” La Flèche said.
