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Specialty bakery boosts Metro's Q2 margins

Clever merchandising, in-store execution and the performance of its specialty acquisitions were all factors helping Metro Inc. post a 4.5% increase in comparable-store sales during the fiscal second quarter, officials said Wednesday.

Overall revenues improved by 6% to $2.1 billion (U.S.) for the quarter, which ended March 14. Officials said the results came amid a competitive and highly promotional competitive environment with product inflation of around 4%.

Specialty bakery Première Moisson, acquired by Metro last year, helped to contribute higher gross margins, Eric LaFleche, Metro’s CEO, said in a conference call discussing results. Around 50% of Metro’s stores in Quebec now carry Première Moisson bakery and deli products, while Metro this week is launching a new line of marinated meats targeting the summer barbeque season from Marche Adonis, the specialty Middle Eastern retailer in which Metro is a majority investor.

Citing the success of these ventures, LaFleche acknowledged the Montreal-based retailer would look at similar opportunities for investment in Ontario.


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With inflation highest in meat and produce, Metro’s merchandisers did a good job managing mix to protect margins, LaFleche added. Net earnings in the quarter improved 15.2% to $91.2 million (U.S.). Gross margin was 19.9% up from 19.6% in the first quarter and 19.5% in the second quarter last year. The improvement was due mainly to Premiere Moisson, Metro said.

“We are not able to pass some of the inflation costs that we see in meat and produce — some of them were pretty significant increases — because of competitive realities and consumer reactions, so … our merchandisers did a good job to manage the mix and focus on other products to keep our sales momentum and deliver a margin while delivering good value for our customers,” LaFleche said. “It's very much an art, good merchandising in this type of environment.”

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