Metro Canada Q4: positive outlook for the year ahead

Date : 21 November 2018

We review Metro’s fourth quarter performance and its plans for the year ahead as it pushes ahead with the integration of drugstore business, Jean Coutu.

Solid finish to the year with food comps up 2.1%

Metro’s fourth quarter sales increased 15.7% to $3.7bn, reflecting the acquisition of Jean Coutu. Sales were up 2.5% excluding the drugstore business. Food same-store sales grew 2.1%, with pharmacy same-store sales up 1.8%. For the full year, sales reached a record $14.4bn, up 9.2%, with adjusted net earnings up 13.0% to $605.9m. Commenting on the results, president and CEO, Eric La Flèche, stated,

"With the acquisition of the Jean Coutu Group, fiscal 2018 was a pivotal year for the Corporation that ended on a strong note with solid growth in same-store sales and adjusted net income in the fourth quarter. The integration work is progressing well and we are confident in our ability to realise the full potential of this promising business combination.”

Source: IGD Research

Focused on Jean Coutu integration activities

This has been a pivotal year for the company, with the acquisition of Jean Coutu providing the company with a significantly stronger platform for the future. Following the deal, which was completed in May, Metro continues to push ahead with integration activities, including delivering cost synergies. During the quarter, synergies of $6.6m were generated, with the business having realised an annualised amount of $17.0m.

Optimising private label ranges

The retailer has also started to transfer private label ranges across both businesses. A limited range of Metro’s Selection and Irresistibles food brands have been made available within the Jean Coutu stores and the Personelle range has moved into Metro’s Brunet drugstores. This will also be tested in the Metro supermarkets. Metro also sees an opportunity to test Miss Fresh meal kits in the Jean Coutu stores in urban locations.

Positive outlook heading into the new financial year

Beyond this, the retailer is pushing ahead with several other initiatives. These include store remodels, the development of an automated distribution centre in Toronto and the expansion of its ecommerce business into the Ontario market. The retailer’s online business continues to attract new customers in Quebec and grow share of wallet among its existing customers. Metro’s leadership reflected a positive outlook for the year ahead, as it laps cost headwinds, inflation returning to normalised levels and relatively modest space growth across the market.

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