Retailer Metro posts higher sales and profits despite labour, inflation pressures

MONTREAL (CP) – Metro Inc. reported a second-quarter profit of $198.1 million, up from $188.1 million a year earlier, as sales gained 1.9 per cent.

The Montreal-based grocery and drugstore retailer said Thursday the profit amounted to 82 cents per diluted share for the 12-week period ended March 12, up from 75 cents per diluted share a year earlier.

Sales totalled $4.27 billion, up from $4.19 billion, as food same-store sales gained 0.8 per cent and pharmacy same-store sales rose 9.4 per cent.

The grocer said food basket inflation in the second quarter was slightly below five per cent, up from 3.5 per cent in the previous quarter.

Online food sales increased by six per cent in the company’s second quarter compared with a year ago, after rising 240 per cent in 2021.

The company, which has about 650 drugstores primarily under the Jean Coutu, Brunet, Metro Pharmacy and Drug Basics banners, said its pharmacy sales were buoyed by a 7.7 per cent increase in prescription drugs as well as COVID-related activities such as the distribution of rapid tests.

Metro’s drugstores also recorded a 13.3 per cent increase in front-store sales compared with the same quarter a year ago, which was affected by a six-week ban of the sale of non-essential products.

On an adjusted basis, Metro said it earned 84 cents per diluted share for the quarter, up from an adjusted profit of 78 cents per share a year earlier.

The retailer operates a network of supermarkets under several banners including Metro and Metro Plus and the discount stores Super C in Quebec and Food Basics in Ontario.

In its outlook, Metro said it continues to face higher than normal inflationary pressures and labour shortages which, if prolonged, could put pressure on margins.

Metro said it expects food sales in the short term to remain relatively stable versus last year while it expects continued growth in its pharmacy business although somewhat moderated versus the first half of the year.

Metro said its third-quarter results will be affected by the labour conflict at its distribution centre in Toronto, which started in early April and was resolved a week later.

The company said it has estimated that the direct costs of the strike and the new labour agreement will have a $10 million pre-tax impact on its current quarter.