Pharmacy gives Metro a strong net earnings boost

Meanwhile, food sales were up marginally as consumers become more value-conscious.
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Prescription, OTC and cosmetics sales in its pharmacies all helped drive Metro Q3 numbers for the quarter than ended July 2.

The company is reporting net earnings of $275.0 million, up 9.0% year-over-year, and adjusted net earnings of $283.8 million, up 8.7%.

Metro, which operates or services a network of about 950 food stores under the Metro, Metro Plus, Super C and Food Basics banners, as well as approximately 650 drugstores under the Jean Coutu, Brunet, Metro Pharmacy and Food Basics Pharmacy, says sales totaled 5.87 billion, up 2.5% versus the same period prior. 

Pharmacy same-store sales were up 7.2% (7.6% in 2021), with a 5.6% increase in prescription drugs supported by COVID-related activities such as the distribution of rapid tests and a 10.7% increase in front-store sales, primarily driven by over-the-counter products and cosmetics. Food same-store sales were up 1.1% (down 3.6% in 2021) versus the same quarter last year.

Metro is reporting that its online food sales were flat versus last year (after being up 19% in 2021), and president and CEO Eric La Flèche says that demand softened online, as it continues to “add capacity selectively.”

La Flèche says Metro maintained market share and he’s pleased with the performance, as well as its supply chain modernization program. He said the company was able to deliver value to customers in an inflationary environment with its “multiple formats, effective promotional strategies and strong private label offering.” Food basket inflation was about 8.5% (after going up 5.0% in the previous quarter).

In Wednesday’s earnings call, La Flèche says shoppers are feeling the pinch, are on budget, and that Metro is working to create value. Its promotion strategies, he says, are highly effective. The conventional banner to discount banner shift has also “accelerated compared with the previous quarter,” he says.

La Flèche says that conventional store margins, however, “are holding up pretty well.” Some categories are growing faster versus last year and versus two years ago, such as hot food and deli, high gross margin departments that are “up significantly.” Pizza, chicken and sandwiches are up and offering great value for shoppers, he says.

Food tonnage was down year over year, as people are traveling more and eating out more with restrictions lifted. However, La Flèche says the situation is improving, without offering long-term guidance. The company says it continues to face higher than normal inflationary pressures and labor shortages, and it is difficult to predict how long this situation will last.

The company says in-store tech rollout is almost complete and that it added 41 stores equipped with self checkout tech.

In May, Metro signed a partnership with Instacart with 180 stores now offering the service. It’s launching click and collect gradually in Super C, the company says.