Metro grocery store employees pick orders for delivery at a store in Toronto, on March 26, 2020.Christopher Katsarov/The Globe and Mail
Metro Inc. expects to continue to benefit from COVID-19 thanks to strong sales and decreasing coronavirus-related costs as the grocer recently ended its temporary wage bump for employees who worked through the early days of the pandemic.
The grocery retailer’s same-store sales, a key retail metric, for the first four weeks of its current quarter were up about 10 per cent at food stores. In its pharmacies, front-door same-store sales were up more than 6 per cent.
“Those are healthy numbers,” said chief executive Eric La Fleche during a conference call with analysts Wednesday after the company reported its third-quarter financial results.
Same-store sales for the completed third quarter were up 15.6 per cent at food stores and down 2.5 per cent in front-door sales at pharmacies.
Meanwhile, additional costs related to operating during COVID-19 started to fall.
The company spent an additional $107-million in COVID-19 related expenses during the three months ended July 4. About half of that came from a temporary wage increase and bonus for its essential workers that has since ended, while the remainder was spent on things such as cleaning, signage and personal protection equipment.
Metro, along with competitors Loblaw Companies Ltd. and Sobeys Inc., announced in June their temporary wage increases would end June 13. Metro was paying workers a $2 hourly premium starting March 8. It offered full-time employees an additional $200 bonus and part-time workers $100 bonus when the extra pay program ended.
The major grocers’ decision to stop paying their workers simultaneously faced criticism and executives from each company were called before the House of Commons standing committee on industry, science and technology in July. Mr. La Fleche and his colleagues said each made their move independently.
“If you assume that half [of the $107-million] is the temporary wage increase, you can assume that half is remaining,” chief financial officer François Thibault said.
That remaining half is about $13-million every four weeks, he said. However, since some expenses are now behind the company, such as purchasing protective shields and donations, he expects that figure to be around $10-million to $12-million every four weeks going forward.
The Montreal-based company reported a $263.5-million profit in its latest quarter, up from $222.4-million a year ago, with sales rising more than 10 per cent as more Canadians cooked at home due to the pandemic.
The profit amounted to $1.04 a share for the 16-week period, up from 86 cents a share a year ago.
Sales totalled $5.84-billion, up from $5.23-billion.
On an adjusted basis, Metro earned $1.08 a share for what was the company’s third quarter, up from an adjusted profit of 90 cents a share a year ago.
Analysts on average had expected an adjusted profit of $1.07 a share, according to financial markets data firm Refinitiv.
In its outlook, Metro said it was impossible to predict how long the pandemic will continue or what it would mean for long-term shopping patterns.
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