The price freeze period will end on 1er February and consumers should expect the prices of certain items sold in grocery stores to increase, warns the boss of Metro, who however assures that the rate of inflation is moderating.
“There are going to be gradual price increases,” replied Metro President and CEO Eric La Flèche at a press conference on the sidelines of the annual meeting. The good news is that these will be more normal increases, as in the past, and lower than what we have seen over the last two years. »
Canadian grocers imposed a price freeze period on their suppliers from 1er November to 1er FEBRUARY. According to “the demands in the system”, Mr. La Flèche notes that the number of suppliers requesting a price increase “is substantially lower” and that the negotiated increases are less significant. “I would tell you 60% fewer requests [de la part] from our suppliers,” he explains.
Suppliers would no longer demand increases above 10%. “Rates are in the single digits [moins de 10 %] and no longer in the two figures [10 % et plus]. There are some who are at the bottom [de la fourchette inférieure à 10 %], there are some who are at the top. »
The businessman gave the example of orange juice among the products whose price will increase. “There are increases attributable to the prices of commodities, such as orange juice due to the price of oranges. The harvests were bad. »
The Montreal company said that food inflation in its stores was 4% in the first quarter ended December 23. This rate was 5.5% in the previous quarter and 8% for the one before that.
“I don’t know what else to say”
The boss of the owner of the Metro, Jean Coutu and Super C brands also rejected out of hand the criticism of the federal Minister of Innovation, Science and Industry, François-Philippe Champagne, who accuses Canadian grocers of “lack of transparency”.
“Large grocers have, to date, not been sufficiently transparent about the causes of food inflation, and they have mostly failed to provide regular updates on initiatives to stabilize prices food in the country,” deplores Minister Champagne in a letter sent Monday to the Commissioner of Competition, Matthew Boswell.
Mr. La Flèche replies that Metro responded to the parliamentarians’ questions and that the company participated in the Competition Bureau’s investigation. “I saw what was said, but I think we were very transparent. I don’t know what else to say. »
The businessman reiterated the industry’s argument. He points out that, despite the increase in sales and profits, margins have remained relatively stable.
Metro had a gross margin of 19.6% in the first quarter. Before the pandemic, this margin was 19.6% for the last three months of 2019 and 19.4% for the same period in 2018, according to old financial reports.
The argument does not seem to have convinced Minister Champagne, who said Tuesday that he was leading discussions to attract a foreign grocer to the country to increase competition.
When asked what he thought of this project, Mr. La Flèche smiled, responding that the market was “extremely competitive in Canada.” “Whenever I hear about international competition, I try to remind everyone that there are three foreign multinationals: Walmart, Costco and Amazon. Any statement [prétendant] that we are not competitive does not reflect the market we are in. »
Sale of Rexall: Metro “on the lookout”
Mr. La Flèche did not want to comment on a possible acquisition of the Rexall pharmacy chain. THE Globe and Mail reported that its owner, the American company McKesson, is seeking to sell the Canadian brand.
Such an acquisition could increase Metro’s presence in the pharmacy segment outside Quebec, where it operates the Jean Coutu brand. “I will not comment on one particular target versus another, but we remain on the lookout for acquisitions. »
The 2024 financial year will, however, be marked by an intensification of investments. Last November, management warned that its investments, in its automated distribution centers, in particular, would lead to slower profit growth for the 2024 financial year. Management, however, maintains its objective of increasing its earnings per share by between 8% and 10% in the long term.
Hypothetically, Metro has the room to make an acquisition, even if it is in a more capital-intensive period. “Yes, our balance sheet is very healthy. There is nothing that would prevent us from making this type of acquisition. »
Results above expectations
Earlier Tuesday, Metro revealed results slightly better than analysts’ expectations.
The company recorded a net profit down 1.1%, to 228.5 million, at a time when it is undertaking an intensification of its investments. Adjusted diluted earnings per share were $1.02.
Revenues, for their part, increased by 6.5%, to 4.97 billion. However, the quarter is one week longer than the previous year.
Comparable food sales (excluding store openings and closings) increased by 6.1%, but by 3.4% if we exclude the additional week. Comparable pharmacy sales increased 6.1%, or 3.9% without the additional week.
Before the results were released, analysts expected Metro to report revenue of $4.91 billion and earnings per share of 99 cents, according to financial data firm Refinitiv.
Metro shares were down 55 cents, or 0.77%, at $70.66 on the Toronto Stock Exchange early in the afternoon.