Metro grocery business posts higher profit, revenue in fourth quarter
THE CANADIAN PRESS
Published Wednesday, November 14, 2012 5:17PM EST
MONTREAL--Metro Inc. is looking to spend $250 million on capital expenditures in its coming year as it continues to revamp its produce sections and upgrade its stores, the grocer said Wednesday.
The plan follows about $282 million that was spent in its 2012 financial year that went toward the opening of seven new stores as well as 19 renovated locations.
"We continue to focus on improving our fresh offering and are pleased with the result so far," said president and chief executive Eric La Fleche, who noted Metro closed 11 stores in its 2012 financial year.
The company has completed the updating of the produce section in the Metro stores in Ontario and revamped the produce department in nearly 100 stores in Quebec. An additional 30 stores are planned for this fiscal year.
"We're also improving produce in our discount stores with more than half of the Super C stores and about 20 per cent of the Food Basics stores redone," La Fleche said.
Metro plans to increase its total square footage to grow about 1.5 per cent in the coming year compared with growth of 0.2 per cent in its just completed financial year.
Metro reported a fourth-quarter profit of $145.1 million or $1.46 per share from $84.4 million or 83 cents per share.
Part of that increase was due to Metro's investment in Couche-Tard, a Montreal-area company that operates convenience stores and gas bars in Canada, the United States and northern Europe.
Couche-Tard contributed $25 million to Metro's net profit in the quarter after the supermarket chain did not participate in the convenience store company's recent share offering.
Metro's adjusted net earnings after excluding a one-time item from Couche-Tard were $123.4 million or $1.24 per share, up from $98.9 million or 97 cents per share a year ago.
Metro's overall sales in the 13 weeks ended Sept. 29 were up 11.1 per cent to $2.9 billion, while same-store sales from locations open at least a year were up 1.1 per cent.
Analysts had expected Metro's adjusted earnings to increase to $1.18 per share on $2.88 billion of revenues in the fourth quarter of its fiscal year, according to analysts polled by Thomson Reuters.
RBC Capital Markets analyst Irene Nattel called the results a "solid beat."
"We believe Metro's solid fourth-quarter results despite intense competition reinforce management's ability to drive both its offering and cost base to deliver for investors," she wrote in a report to clients.
Nattel noted the strong results will provide the company with a "nice operating tailwind" as it heads into next year.
The stiff competition among supermarkets is set to become even more intense next year with the arrival of Minneapolis-based Target Corp (NYSE:TGT) in Canada.
Target, which will have limited food offerings, joins an already crowded marketplace that includes an ever growing number Wal-Mart Supercentres.
Last month, Metro announced the sale of its Distagro foodservice division, which supplies restaurants and gas station convenience stores, to Sysco Canada for an undisclosed price.
The transaction is slated to close in mid-December and will see 140 employees at its warehouse in Boucherville, Que., transferred to the subsidiary of Sysco Corp.
Metro will retain its warehouse in St-Jean-Port-Jolie, Que., which employs less than 100 people and provides food to a series of small convenience and grocery store banners.
It has rolled out its new "fresh" food program in an attempt to boost sales.
Metro is Quebec's leading grocery chain with nearly 34 per cent market share. It has more than 65,000 employees in Quebec and Ontario.
The company operates a network of close to 600 food stores under several banners including Metro, Metro Plus, GP, Super C and Food Basics, as well as over 250 drugstores under the Brunet, Brunet Plus, Clini Plus, The Pharmacy and Drug Basics banners.
Shares in the company closed up 42 cents at $59 on the Toronto Stock Exchange.