Metro will take steps to respond to the demands of customers who may want to buy more Canadian-made products because of the tariff threats. A woman walks pass a Metro grocery store in Toronto on Wednesday Nov. 1, 2017.Doug Ives/The Canadian Press
The weaker Canadian dollar is putting pressure on the cost of food that could lead to some price increases, the chief executive officer of grocery giant Metro Inc. MRU-T said Tuesday.
Eric La Flèche added that this pressure, combined with the threat of U.S. and Canadian tariffs, is creating a “volatile environment” for consumers.
“The biggest concern is the Canadian dollar,” he said during a news conference after the company’s annual meeting on Tuesday.
Fresh produce, for example – which is not produced in Canada at this time of year – is generally priced in U.S. dollars, whether companies are importing it from the United States or from alternative sources, he explained. Metro is taking steps to mitigate cost increases, he added.
“We hope that inflation stays normal, and we’re doing everything we can that it stays in the 2-per-cent range, but we don’t control everything,” he said. “The dollar is the big worry.”
U.S. President Donald Trump has threatened to impose tariffs on imports from Canada as early as Feb. 1, an economic threat that has hurt the value of the loonie relative to the U.S. dollar. In turn, Ottawa has vowed retaliatory tariffs covering billions of dollars of U.S. goods flowing into Canada.
“I hope this trade war will not concern food and food prices, for everybody – for Canadian citizens, for Quebeckers. Nobody would like to see tariffs on imported food,” Mr. La Flèche said on Tuesday. “But we’ll let the government do their job and defend Canadian interests as best they can. It’s a very volatile situation, and we will just have to wait and see.”
In the meantime, Metro will take steps to respond to the demands of customers who may want to buy more Canadian-made products because of the tariff threats, he said.
“We always favour Canadian local products in our purchases, so that’s not new. Clearly there’s a little more emphasis because of what’s happening,” Mr. La Flèche said. The stores already have signs identifying products made in Canada, and have not yet introduced any new signage, but he said it is the retailer’s job to help customers identify those products. “It’s a work in progress.”
On Tuesday, Montreal-based Metro reported a 4-per-cent increase in profit in the first quarter, as adjusted net earnings rose to $245.4-million or $1.10 per share, from $235-million or $1.02 in the same period the prior year. The numbers were adjusted to account for the favourable resolution of a tax position in prior years, which negatively affected this year’s earnings, as well as other items.
On an unadjusted basis, net earnings grew to $259.5-million in the quarter ended Dec. 21, 2024, compared with $228.5-million in the prior year.
Metro executives referred to fiscal 2024 as a “transition year,” as the company invested more than usual in upgrades to its supply chain, which weighed on profits. The spending included transitions to new distribution centres with greater automation in both Quebec and Ontario. This has resulted in greater efficiency in its operations and improved service to its stores, the company said.
Executives have previously said that they expected earnings growth to resume in fiscal 2025. On Tuesday, the company reiterated a previously disclosed target for the medium and long term, of 8-to-10-per-cent growth in adjusted net earnings per share annually.
Metro also announced on Tuesday that it had increased its dividend by 10.4 per cent to 37 cents per share.
First-quarter revenue grew by 2.9 per cent compared with the same quarter the prior year, to $5.1-billion.
Same-store sales – an important industry metric, which tracks sales growth not tied to new store openings – rose by 1 per cent at the company’s grocery stores, and 5.1 per cent at its pharmacies, including the Jean Coutu drugstore chain. Pharmacy sales included a 7.3-per-cent increase in prescription drugs and a 0.5-per-cent increase in sales in the front of the store.
The sales results were affected by a shift in the calendar, as Metro’s first quarter the previous year ended on Dec. 23 rather than the 21st. That meant this quarter’s results included two fewer days of the busy pre-Christmas shopping period compared with the year before. Adjusting for this shift, same-store sales grew by 2.4 per cent at the grocery stores, and pharmacy front-store sales were up 1.9 per cent, the company reported.
Discount stores are continuing to outperform the company’s conventional grocery stores, Mr. La Flèche told analysts on a conference call Tuesday, but that gap has narrowed in recent months as inflation has slowed. Metro operates the lower-price chains Food Basics and Super C, and plans to open 12 new discount stores this year.
Online grocery sales grew by 18.6 per cent compared with the previous year. The expansion of online order pickup at its discount stores, as well as partnerships with third-party delivery companies such as Uber Eats, helped to fuel growth in e-commerce, Mr. La Flèche said.