MONTREAL — Price inflation has returned to Canada, but much of its effects are being swallowed up in promotional battles, officials of Metro Inc. here said Wednesday.
The retailer reported sales of $3.6 billion (U.S.), an increase of 0.4%, for the fiscal third quarter that ended July 2. Same-store sales increased by 0.5%. Net earnings of $127 million for the quarter improved by 4.1% and EBITDA was essentially flat at $252 million.
Eric LaFleche, chief executive officer of Metro, in a conference call discussing financial results Wednesday, said price inflation has returned to Canada after nearly two years of deflation, but promotional pricing — in part sparked by a rollout of Wal-Mart Supercenters in Quebec — has masked the effect on the top line.
“It was modest inflation in the third quarter, mostly because of the promotional impact and the promotional ways we're merchandising in both of our markets [Quebec and Ontario],” LaFleche said. “There is retail inflation. Costs are going up — that's being reflected at retail on the shelf, but it's being promoted back in so the top line doesn't show the inflation. … My sense is that inflation is on a positive track.”
LaFleche said the impact of Wal-Mart has been “modest” so far, saying Metro's discount Super C and Food Basics banners are priced right against Wal-Mart and the Metro & Moi loyalty program will help its conventional stores.
“I think we're well-equipped to face that challenge but it is a challenge,” he said.
Fleche said Metro was looking to improve its ethnic offerings and was making progress on a fresh produce initiative in Quebec. The company is looking to reduce costs in ways it said would not affect the consumer, particularly in distribution, where it plans to shutter one of its Ontario grocery warehouses and consolidate it with another unit there, LaFleche said.