Canadian food and drug retailer Metro Inc. saw fiscal 2022 second-quarter sales remain strong, reaching $4.27 billion, up 1.9% compared to $4.19 billion in the second quarter of 2021.
In the quarter ended March 12, 2022, Metro also reported food same-store sales were up 0.8% versus the same quarter last year and were up 11.5% for the first eight weeks of the second quarter compared to the same pre-COVID period of 2020. Online food sales increased by 6.0% versus last year (up a whopping 240.0% in 2021).
“With most government measures lifted and customers gradually returning to pre-pandemic behavior, we continue to see an increase in traffic and a decline in the average basket in our food stores,” president and CEO Eric Richer La Flèche said in an analysts’ call on Thursday morning. "Our discount banners are growing faster than our conventional banner and online sales are stabilizing. The supply chain continues to be challenging, mostly because of product shortages from our vendors."
In online grocery, La Flèche said, "We are seeing demand stabilize as a portion of consumers return to pre-pandemic behavior and opt to shop in-store more often. We are pleased with our dedicated [online] facilities in Montreal with key metrics progressing in the right direction. On the click-and-collect side, we continue to deliver against our plan with some 210 Metro stores now offering click-and-collect across the provinces of Québec and Ontario. This allows us to reach close to 90% of the population of Québec and 75% in Ontario.”
Pharmacy same-store sales were up 9.4%, with a 7.7% increase in prescription drugs supported by COVID-related activities such as the distribution of rapid tests, and a 13.3% increase in front-store sales supported by a stronger cough and cold season as well as the lower sales last year because of the six-week ban of the sale of non-essential products. Pharmacy same-store sales were up 11.0% for the first 8 weeks of the second quarter versus 2020 (pre-COVID period).
La Flèche said that inflation continues to have an impact on grocery sales. “As we said at the end of January, clearly the inflationary picture is accelerating. So that's having an impact on our customers," he noted. “Our discount banners are growing nicely faster than our conventional banners. So there's a search for value. Customers are trading down, there's high inflation in certain categories — I can think of certain meat cuts or beef in particular. So that's having an impact on consumer behavior. They're trading down for cheaper costs. On the grocery side, private label is doing really well because it's great value and a lower price point in general."
Promotions are back to their pre-pandemic level, La Flèche added, noting that "whenever there's a spike in inflation like this, promotional penetration increases. We've seen that before. And we see strong sales whenever we feature a key item that has experienced inflation."
Second quarter net earnings were $198.1 million in fiscal 2022 compared with $188.1 million in 2021, and fully diluted net earnings per share were $0.82 compared with $0.75 in 2021, up 5.3% and 9.3% respectively. Taking into account adjustments for the 2022 and 2021 second quarters, consisting of the after-tax amortization of intangible assets acquired in connection with the Jean Coutu Group acquisition, adjusted net earnings for the second quarter of Fiscal 2022 totalled $204.7 million compared with $194.7 million in 2021, and adjusted fully diluted net earnings per share(1) amounted to $0.84 versus $0.78, up 5.1% and 7.7% respectively.
Overall, Metro’s retail base in Quebec, Ontario and New Brunswick includes about 950 food stores under the Metro, Metro Plus, Super C, Food Basics, Adonis, Marché Richelieu and Première Moisson banners as well as approximately 650 drugstores and pharmacies under the Jean Coutu, Brunet, Metro Pharmacy and Food Basics Pharmacy banners.