MONTREAL (FNS) -- Metro here achieved a 23% increase in its first-quarter net income for the three months ended Dec. 22, 2001, boosted in part by a continued commitment in upgrading its store base of 539 stores.
The company also had a two-for-one stock split and a dividend increase, topped off with projections of more growth this year, the company said at its annual shareholders meeting on Jan. 29.
Net income was $19.1 million U.S. or 37 cents a share. This was the 45th consecutive quarterly gain, which began when President and Chief Executive Officer Pierre Lessard joined the company. Profit for the year-earlier period was $15.5 million, or 38 cents. Sales were $775 million vs. $718 million.
When Lessard took over in the mid-1990s, Metro was worth about $31.5 million. Today, its market capitalization is around $1.26 billion. During the same period, its share price has skyrocketed from 80 cents to $25.83 on Jan. 29.
Lessard told shareholders that Metro will fight Loblaw Cos. and Sobeys by investing heavily in its roughly 500 stores based mostly in Quebec and 39 Loeb stores in Ontario, improving productivity and increasing the number of its house brands.
Its Merit Selection private-label program accounts for about 19% of its grocery sales, which will increase to 23% over the next two years.
Lessard said Metro is more likely to take over another food chain rather than become an acquisition target itself, although he doesn't see any takeovers in the foreseeable future.
"And our targets are in Canada," he said, and not in New England as suggested by some media reports. The company will continue to grow by expanding its Loeb operations in Ontario through store expansions and new store openings.
Analysts remain bullish on Metro's future growth despite Loblaw's takeover of Provigo in Quebec and the growing presence of Sobeys in the province.
"Metro has become the best regional player in Canada," said Perry Caicco, an analyst with CIBC World Markets in Toronto.
"In fact, we believe that it gained market share on Loblaw in Quebec in 2001," he said. "Metro stores have put a huge push on perishables, levering their meat reputation into credibility across produce, deli and bakery."
"They're still grinding out good numbers," said analyst Bill Chisholm of Dundee Securities in Toronto. "They've put Loeb on the same information system as the rest of the company, which should improve margins."
