Higher food prices are pushing Canadians to eat at home more often than they did in the summer, when the easing of pandemic-related restrictions in some jurisdictions drove people back to restaurants.
Grocery stores are benefitting from the shift, even as they also grapple with inflationary pressures, Metro Inc. chief executive officer Eric La Flèche said on Wednesday.
“Clearly there’s inflationary pressure, and that’s causing customers to look for value,” Mr. La Flèche said during a conference call to discuss the grocery retailer’s financial results. The company continues to expect that food sales will remain higher than they were before COVID-19, he added.
Metro’s suppliers have experienced their own cost pressures, related to issues including commodity price increases, weather issues and labour shortages. In response, suppliers raised their prices beginning in late summer, and continuing in the past few weeks, Mr. La Flèche said.
Inflation often causes shoppers to cut back – shopping at discount rather than full-price stores, buying some frozen products in place of fresh, and looking at different cuts of meat. Mr. La Flèche said the company has not yet seen that behaviour, but expects it could happen if inflation continues to be a concern. That may favour the company’s discount stores, Food Basics and Super C, he said. Retailers are also “aggressive” with promotions, he added, though some items are difficult to promote amid cost pressures.
“We are working hard to contain those costs, and make sure that we are market competitive and can provide great prices to our customers,” he said.
Metro reported higher net earnings in the fourth quarter, even as sales decreased compared to last year’s surge in demand driven by COVID-19.
The Montreal-based retailer reported net earnings of $194-million or 79 cents per share in the 12 weeks ended Sept. 25, compared to $186.5-million or 74 cents per share in the same period last year.
Metro’s sales fell by 1.2 per cent in the quarter, to $4.1-billion.
Grocery same-store sales – an important metric that tracks sales changes not related to new store openings or closings – fell by 2.9 per cent in the fourth quarter.
Grocery e-commerce sales were flat compared to last year, when the industry saw a massive shift toward online shopping during the pandemic that more than doubled Metro’s online sales.
“The online market is still growing, but at a slower pace,” Mr. La Flèche said.
In addition to its home-deliver business, the company has rolled out click-and-collect online ordering for store pickup at 180 locations, more than planned; and this week, Metro is launching pickup at 250 Jean Coutu drugstores.
Pharmacy same-store sales grew by 4.1 per cent in the quarter, driven by higher prescription drug sales.
Sales of higher-margin beauty and cosmetics products are increasing as people return to the office, but are not yet at the levels they were two years ago, Mr. La Flèche said.
Metro noted on Wednesday that it will no longer report costs related to COVID-19, since the line between pandemic-related and regular costs is blurring.
For the fiscal year ended Sept. 25, Metro’s net earnings grew to $825.7-million or $3.33 per share, compared to $796.4-million or $3.14 per share in fiscal 2020. Sales grew by 1.6 per cent to $18.3-billion.
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Grocer Metro posts higher profit; rising food prices pushing Canadians to eat at home more often - The Globe and Mail
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