Metro closed its first quarter of 2020 on December 21, 2019 with 1.3% sales growth versus Q1 2019, amounting to CAD4.0 billion. These sales incorporate same-store food sales of 1.4% and food basket inflation of 2.0%. Accounting for the shift in Christmas sales, same store food sales would have been 2.0%. Pharmacy same-store sales also increased, reaching 3.6% versus 1.5% same quarter 2019, breaking into a 4.1% increase in prescription drug sales (prescription drug count was up 2.5%) and a 2.7% increase in front-store sales.
Net earnings for the quarter were CAD170.2 million versus CAD203.1 million for the same quarter in 2019. Adjusted net earnings for Q1 2020 would total CAD180.9 million compared to CAD172.2 million during the same quarter last year. Adjustments include accounting for the loss on disposal of subsidiary MissFresh in 2020 and the 2019 gains on disposal of investments in Colo-D Inc. and on divestiture of 5 pharmacies. The Jean Coutu acquisition generated synergies amounting to CAD15 million in fiscal 2020 versus Q1 2019.
Cash inflows amounted to CAD30.2 million in Q1 2020 compared to outflows of CAD177.1 million during the same quarter 2019. The difference primarily stems from a change in non-cash working capital items in 2020 as well as higher taxes in 2019.
During Q1 2020, the retailer opened 4 stores and carried out major expansions and renovations of 8 stores. Two stores relocated and 4 stores closed resulting in a net increase of 86,000 square feet, or 0.4% of food retail network.
Going forward, the retailer is in a strong position to continue seeing success and increasing growth. Metro is focused on investing in its retail network and supply chain, and addressing customer needs. The retailer has shown its focus on its network and supply chain with store expansions and renovations, as well as its work to improve order fulfillment.
Modernization with the addition of fresh and frozen distribution centres also addresses customer needs; it acknowledges shopper demand for convenience and fresh at the same time, and supports the retailer’s “Always fresh, always in stock and always at great prices” motto.
In addition, leveraging its metro&moi loyalty program in Quebec and Air Miles in Ontario should continue to help the retailer maintain loyalty in its shopper base with personalized experiences. Combined with growth of its health and wellness offer through integration of Jean Coutu, Metro stands a chance to stay competitive against major rivals. Winning with loyal shoppers and remaining strong against competitors through progress against its goals should help Metro continue to see success in coming quarters.
For more information please contact:
Ellie Pinto, Analyst