Metro says its profit margins are stable, despite soaring prices
The grocer's gross margin reached 20.4%, the same level as last year.
L' Food inflation has jumped to a 10% pace at Metro and price pressure remains high, says the grocer's big boss.
Suppliers continue to face inflationary pressures that are driving up food prices, President and CEO Éric La Flèche said during a conference call to discuss the owner's latest quarterly results. Metro, Super C and Jean Coutu brands.
He mentioned that suppliers continue to ask for price increases at a high percentage. We have already had to accept several increases, at various times during the year at higher rates. Those who come back with other demands, we question them, he said.
The leader says it's the job of the x27; Metro team to try to mitigate price increases, but adds that suppliers are in a difficult position. Suppliers are under pressure. They have cost increases. We have to sit down with them and find common ground, he stressed.
At a time when major Canadian grocers are being singled out for soaring food prices, Metro denies profiting from them, while its margins have remained relatively stable.< /p>
Despite an 8.3% revenue increase to $4.4 billion in the fourth quarter of its fiscal 2022 (ended September 24), gross margin remained flat. It reached 20.4%, the same threshold as last year. By comparison, the gross margin was 20.2% in 2019, before the pandemic.
Major Canadian grocers under Bureau investigation competition announced at the end of October. The move comes against a backdrop of escalating food inflation, despite a moderation in general inflation.
In September, the price of food purchased from stores jumped 11.4% from a year ago, according to Statistics Canada. This is the fastest pace since August 1981. On Wednesday, Statistics Canada reported that inflation remained high in this category in October at 11%.
Mr. La Flèche affirms, for its part, that the market is very competitive while consumers are very sensitive to price. He mentioned that he was seeing more popularity of discount stores and private labels.
With the transition to discount stores [like Super C] accelerating, all stores want to protect their market share, so they are aggressive. We will defend ourselves and we will do our best to keep our market share in traditional brands [like Metro].
Metro's net profit is down in the fourth quarter, but this decrease is explained by an asset impairment loss related to the decision to withdraw Jean Coutu from the Air Miles loyalty program in the spring of 2023.
Excluding this item, the company's net income would have increased by 9.4% to $219.4 million.
Adjusted diluted earnings per share was at 92 cents. Prior to the earnings release, analysts had expected earnings per share of 90 cents, according to financial data firm Refinitiv.
The stock was up $1.49, or 2 .06% to $73.74 on the Toronto Stock Exchange around noon.