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Metro Inc. reported lower profits in the third quarter as Canadians looked to get more out of their buck in an inflationary environment.
The company’s third quarter net earnings were down 14.6 per cent to $296.2 million compared to a year ago. Its diluted net earnings per share came in at $1.31, down 12.1 per cent from 2023.
Chief executive Eric La Flèche said the environment remains difficult for many of Metro’s customers, despite food inflation declining.
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“Consumers are looking for value. They’re participating to promotion more. They’re trading down,” La Flèche said during Wednesday morning’s earnings call. He added that promotional penetration has been really high and private label sales are doing well.
Metro said its “food basket inflation,” which is its internal pricing increases, has been slightly lower than the reported consumer price index for food purchased from stores.
The retailer released its earnings results for the quarter ended July 6, reporting a 3.5 per cent increase in sales to $6.65 billion. Its food same-store sales were up 2.4 per cent, while pharmacy same-store sales were up 5.2 per cent.
La Flèche said the company’s discount banners fuelled this growth in sales, on top of high comps and discounts.
Similar to previous quarters, he said transaction count was up in all Metro banners, with higher foot traffic growth on the discount side and the average basket came down slightly.
“As cost of living pressures are still present and consumers search for value, private label sales continue to outpace national brands,” the chief executive said.
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Marc Giroux, Metro’s chief operating officer for food, said the company has been able to use data from its MOI loyalty program and analyze customer behaviour to promote cross-shopping between its banners.
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The third quarter results were mostly in line with expectations. Its adjusted EBITDA was $620 million, an increase of 1.3 per cent and within the forecast range of $613-$623 million.
“(Metro’s) lengthy track record of strong execution and delivering predictable financial results has given investors confidence to look beyond the F24 investment year and toward F25 and resumption in growth,” Royal Bank of Canada analyst Irene Nattel wrote in a note to clients.
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