Won’t be able to match the panic-buying early in the pandemic
Article content
Sales at Metro Inc., one of Canada’s top supermarket chains, rose by more than five per cent during the second quarter as public health restrictions extended the trend of people eating from home that has fattened grocery revenues throughout the pandemic.
But after a year of making dramatic gains versus pre-pandemic sales, the company now faces the tough task of beating its performance earlier in the pandemic. The last weeks of its second quarter, ended March 13, matched up against the beginning of 2020’s surge in panic buying, when frantic shoppers cleared out grocery shelves to stock their pantries.
“We expect the year-over-year food sales, in the short term, to decline,” Metro said in an earnings update on Wednesday. “However, in absolute terms, we expect food sales to remain strong, and to compare favourably to pre-pandemic levels.”
Metro reported adjusted second-quarter net earnings of $194.7 million, a 6.5 per cent increase from the same period a year ago, on sales of $4.2 billion. Same store sales — a key metric in retail — of food rose 10.1 per cent in the first 10 weeks of the 12-week quarter, though sales in the final two weeks — which directly compared to the beginning of last year’s panic buying in early to mid-March 2020 — dragged the overall growth down to 5.5 per cent.
Article content
RBC analyst Irene Nattel called the results “solid and in line” with expectations. Metro’s adjusted net earnings of 78 cents per share were slightly better than average expectations of 76 cents, she said in a research note.
Metro’s pandemic-related expenses in the quarter totalled $29 million, including $8 million on gift cards for frontline workers. Last year, the chain courted major controversy when it cancelled $2 hourly wage bonuses for staff mere months into the pandemic, and on the same day its two main rivals cancelled similar bonuses. Metro chief executive Eric La Flèche sparked anti-trust concerns when he told a parliamentary committee that he had called his competitors to ask when they planned on cancelling the pay bonuses. But the company has strongly denied any wrongdoing in the matter.
Metro has since paid its staff bonuses via gift cards, issuing them in December and February, with another round coming in May. The gift cards range from $75 to $300, depending on hours worked. An $8-million expense was booked in the second quarter relating to the February gift card, with an additional $8 million expected for the May gift card.
Metro, which also owns the Quebec-based Jean Coutu pharmacy chain, said its pharmacists are administering COVID-19 vaccines and will soon start to accelerate the pace of doses “as soon as more vaccine supply becomes available in the coming weeks.”
“This is not a huge money maker,” La Flèche told analysts on a conference call, adding that it was more about community service. “But there is some compensation.”
Pharmacy same-store sales at Metro fell 0.8 per cent — from a 7.9 per cent increase last year — which the company blamed on “restrictions on sales of non-essential products in Quebec for a period of six weeks during the quarter, the milder cold and flu season, and the pandemic-related increase in sales experienced at the end of the second quarter last year.”
