Metro posted a huge earnings boost for the third quarter as the company remains embroiled in a labour dispute affecting thousands of GTA workers.
Canada’s third largest grocer said net earnings soared to $346.7 million in the quarter ended July 1, up 26% compared with a year earlier, part of a trend toward consumers being more value-focused.
Sales spiked nearly 10% to $6.43 billion, led by a food same-store sales increase of 9.4% and pharmacy a same-store sales increase of 5.9%.
Online food sales were up 99% versus last year, mostly driven by higher partnership sales. Metro says it is adding more click-and-collect capacity and reaping benefits from Uber and Instacart partnerships.
In this morning’s earnings call, Metro president and CEO Eric La Flèche said there’s a continuing shift to discount banners like Super C and Food Basics, calling discount a “big driver of growth,” especially in a challenging retail environment.
Average basket size “remained flat,” he notes, though private label sales are outpacing national brands, which is helping offset lower gross margins.
Price increase requests from suppliers are down 40%, the company says. That’s on top of “many double digit increases last year.”
In a tough environment, La Flèche says he is pleased with its Net Promoter Scores and customer satisfaction performance overall.
Metro also added one million new members to its Moi loyalty program, bringing total membership to 2.2 million. La Flèche says there is a higher basket spend across all banners for Moi shoppers and the company is “very pleased” with Moi signups, which are “ahead of schedule.” The company cited a strong media campaign as a driver.
Since the end of July, Metro has been in a labour dispute affecting 3,700 workers across 27 GTA locations. Wages remain the top issue for the workers, who said the most recent proposed contract did not keep up with increases to the cost of living. A common refrain from workers on picket lines has been that they can’t afford to shop at their own stores, even though Metro has reported several consecutive quarters of increased profits.
La Flèche says the company is “clearly disappointed,” given it had worked constructively to reach “a very good agreement that was unanimously recommended by union representatives.” He adds that Metro remains “committed to the bargaining process.”