Metro Inc. racheted up sales growth in its fiscal 2022 third quarter, upholding gains since the start of the year.
In the 16 weeks ended July 2, sales rose 2.5% to $5.87 billion (Canadian) from $5.72 billion a year earlier, Montreal-based Metro reported yesterday. The Canadian food and drug retailer rebounded from a 2% decline in the 2021 third quarter, which reflected the cycling of big sales increases driven by the pandemic.
On a same-store basis, food sales edged up 1.1% in the 2022 third quarter after a 3.6% decrease in the prior-year period. Metro noted that food basket inflation was 8.5%, compared with 5% in the 2022 second quarter. Online food sales for Q3 came in flat atop a 19% jump in the 2021 quarter.
Comparable pharmacy sales advanced 7.2% in Q3 2022, building on a 7.6% gain in the year-ago period, and were fueled by a 5.6% increase in prescription drugs supported by COVID-related activities, such as the distribution of rapid tests, and by a 10.7% surge in front-end sales, mainly from over-the-counter health care items and cosmetics, Metro said.
The strong pharmacy performance also helped Metro’s third-quarter gross margin by compensating for a dip in food retail margin, the retailer noted.
“We are pleased with the performance of our food and pharmacy businesses in the third quarter, which was achieved in a challenging operating environment with increasing inflationary pressures as well as ongoing labor shortages that are impacting the supply chain and our operations,” Metro President and CEO Eric La Flèche said in a statement. “I want to thank our teams, who strive to deliver the best value possible to customers in these inflationary times with our multiple formats, effective promotional strategies and strong private-label offering.”
At the bottom line, 2022 third-quarter net income totaled $275 million, or $1.14 per diluted share, compared with $252.4 million, or $1.03 per diluted share, a year earlier. Adjusted net earnings were $283.8 million, or $1.18 per diluted share, versus $261.2 million, or $1.06 per diluted share, in the year-ago span.
Analysts, on average, had projected adjusted EPS of $1.18, with estimates ranging from a low of $1.16 to a high of $1.22, according to Refinitiv.
“We are on track with our supply-chain modernization program, as the transition to our fully automated frozen food distribution center in Toronto is now complete, and the ramp-up is progressing well,” La Flèche added.
The company broke ground on the Toronto-area frozen DC, located in Etobicoke, Ontario, in September 2019 and opened it in early January 2022. Also pending is a $420 million project in Quebec, announced in 2020, to build an automated DC for fresh and frozen products and enlarge an existing produce and dairy DC. The fresh/frozen facility in Terrebonne, Quebec, just north of Montreal, is due to open in 2023, while the expansion of the produce/dairy facility, located in Laval, Quebec, is earmarked for completion in 2024.
Overall, Metro’s retail base in Quebec, Ontario and New Brunswick includes more than 960 food stores under the Metro, Metro Plus, Super C, Food Basics, Adonis, Marché Richelieu and Première Moisson banners as well as about 650 drugstores and pharmacies under the Jean Coutu, Brunet, Metro Pharmacy and Food Basics Pharmacy banners.