MONTREAL — Improved store conditions and better execution in shrink helped Metro Inc. overcome what it viewed as the peak of food-price deflation during the second quarter, the retailer here said last week.
Overall customer counts were up slightly in the quarter, but average basket size decreased as deflation for the basket averaged about 2% during the quarter, which ended March 13, Metro officials said.
Quarterly net earnings of $80.5 million (U.S.) improved by 5.2% from the same period last year and sales of $2.6 billion improved 1.1%, despite realizing benefits the previous quarter of a labor strike at a competitor and high product price inflation.
In a conference call discussing results, Eric LaFleche, president and chief executive officer of Metro, said the chain is already deriving benefits from a newly announced partnership with the loyalty firm Dunnhumby. “They are helping us in the merchandising mix, flier, promo, assortment pricing — the basics of food merchandising,” he said.
EBITDA improved 5.5% from the second quarter last year, representing 6.7% of sales vs. 6.4%.
The margin increase “was not achieved by expensive pricing,” LaFleche said. “Our pricing is and remains very competitive. We were focused on the bottom line. We managed our costs, reduced our shrink, and our private-label sales are growing.”
LaFleche described the competitive environment as “aggressive,” but less so than during the holiday season, with retailers cautious about fighting for sales in a deflationary environment. He estimated inflation could return to normal levels in the fall.