We review Metro Inc.’s second quarter results and progress with the integration of drugstore chain, Jean Coutu.
Solid gains in food with same-store sales up 4.3%
Metro’s second quarter sales increased 27.7% to $3.7bn, reflecting the acquisition of drugstore operator, Jean Coutu. Excluding this, sales were up 4.0%. The retailer’s food same-store sales were up 4.3%, with pharmacy same-store sales up 1.1%. The growth in food sales was supported by higher inflation, accelerating to 2.5% in the quarter, stronger customer traffic and volume gains. Alongside the strong growth in sales, the retailer saw net earnings increase 13.7% to $121.5m.
Source: IGD Research
Rationalising the store network
Metro is on-track to launch its grocery ecommerce offer in Ontario before the summer. It is using the same store-pick model that has been developed in Quebec, undertaking all aspects of fulfillment in-house. The retailer also accelerating plans to rationalise its store network. It plans to convert, relocate or close 12 stores to better meet customer needs and reduce operating costs. Most of these will be undertaken in the Ontario market, with supermarkets converted to its Food Basics discount format.
Change in leadership for pharmacy business
The retailer also announced a change in leadership for its pharmacy division, the Jean Coutu Group. Effective May 31, François Coutu will retire as president, to be replaced by Alain Champagne. Champagne joins Metro from Optimé International, where he holds the CEO position. He has previously served as president at McKesson Canada and held various executive roles with Frito Lay Canada and Procter & Gamble.
Confident om achieving cost synergies
He takes over as the integration of the business into the wider Metro group continues. As it approaches the first anniversary of the acquisition, it has reached a run-rate of annualised synergies of $50m. The pace of synergies will slow moving forward, as it completes the work on procurement, and shifts its focus to integrating retail systems and distribution facilities. Metro plans to adapt the Jean Coutu automated facility in Varennes to also supply its Brunet drugstore network and adopt the Coutu POS and lab platforms for the Brunet business.
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