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Metro sees sales edge up in first quarter

Earnings per share in line with analysts’ forecast

Russell Redman

January 30, 2019

3 Min Read
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Canadian food and drug retailer Metro Inc. got a sales boost in its fiscal 2019 first quarter from its acquisition of Jean Coutu Group.

Metro said Tuesday that for the quarter ended Dec. 22, 2018, total sales surged to $3.98 billion (Canadian), up 27.8% from $3.11 billion a year earlier. Excluding $757.1 million in sales for the first quarter of 2019 from Jean Coutu, sales increased 3.5%.

Food same-store sales rose 3.2% year over year, with inflation in the food basket at roughly 1.8%, according to Metro. Comparable pharmacy sales edged up 1.5%, reflecting gains of 0.8% for prescription drugs and 2% in the front end. The number of prescriptions filled climbed 2.2%.

Operating income (before depreciation and amortization) and associates' earnings for the first quarter totaled $320.6 million, or 8.1% of sales, compared with $217.8 million, or 7% of sales, a year ago.

Metro said that during the quarter it divested five pharmacies for a gain of $7.4 million, and in the fiscal 2018 quarter the company recognized $11.4 million in distribution network modernization project costs and $2 million in expenses from the Jean Coutu acquisition. Excluding those items, adjusted operating income (before depreciation and amortization and associates' earnings) for the 2019 quarter was $313.2 million, or 7.9% of sales, versus $231.2 million, or 7.4% of sales, in the 2018 period.

Related:Metro wraps up acquisition of Jean Coutu Group

On an adjusted basis, excluding the Jean Coutu, operating earnings (before depreciation and amortization and associates' earnings) were $226.3 million, or 7% of sales, in the 2019 first quarter compared with $231.2 million, or 7.4% of sales, in the year-ago period. Metro said the change stems mainly from a rise in minimum wages, particularly in Ontario, and real estate gains made in 2018.

"We are very pleased with our first-quarter results, which reflect strong execution of our business plans and the success so far of our combination with the Jean Coutu Group,” Metro President and CEO Eric La Flèche said in a statement. “In a very competitive market environment, we are well-positioned to meet our customers' high expectations and continue to create long-term value for our shareholders.”

At the bottom line, 2019 first-quarter net earnings came in at $203.1 million (79 cents per diluted share) from $1.3 billion ($5.67 per diluted share) a year earlier. The 2018 quarter included a $958.9 million after-tax gain from the disposal of investments in associates, a $195.7 million after-tax gain from the revaluation and disposal of an investment at fair value and a $26.7 million after-tax share of an associate's earnings.

Related:Metro sells stake in Couche-Tard to fund Jean Coutu purchase

Excluding special items, adjusted net earnings for the 2019 quarter were $172.2 million (67 cents per diluted share) versus $126.7 million (55 cents per diluted share) in the 2018 quarter, Metro said.

The adjusted earnings per share were in line with analysts’ estimates. On average, analysts projected adjusted EPS of 67 cents for the 2019 first quarter, according to Zacks Investment Research.

Metro added that during the quarter it realized synergies of $10.7 million from the Jean Coutu purchase, for annualized amount of $28 million.

The 2019 quarter’s results reflected the acquisition of Jean Coutu, which was completed on May 11, 2018, as well as Metro’s disposal of its investment in Alimentation Couche-Tard in the 2018 first quarter.

Overall, Metro’s retail network includes more than 600 food stores under the Metro, Metro Plus, Super C and Food Basics banners as well as of over 650 drug stores under the Jean Coutu, Brunet, Metro Pharmacy and Drug Basics banners.

Read more about:

Couche-Tard

About the Author

Russell Redman

Senior Editor
Supermarket News

Russell Redman has served as senior editor at Supermarket News since April 2018, his second tour with the publication. In his current role, he handles daily news coverage for the SN website and contributes news and features for the print magazine, as well as participates in special projects, podcasts and webinars and attends industry events. Russ joined SN from Racher Press Inc.’s Chain Drug Review and Mass Market Retailers magazines, where he served as desk/online editor for more than nine years, covering the food/drug/mass retail sector. 

Russell Redman’s more than 30 years of experience in journalism span a range of editorial manager, editor, reporter/writer and digital roles at a variety of publications and websites covering a breadth of industries, including retailing, pharmacy/health care, IT, digital home, financial technology, financial services, real estate/commercial property, pro audio/video and film. He started his career in 1989 as a local news reporter and editor, covering community news and politics in Long Island, N.Y. His background also includes an earlier stint at Supermarket News as center store editor and then financial editor in the mid-1990s. Russ holds a B.A. in journalism (minor in political science) from Hofstra University, where he also earned a certificate in digital/social media marketing in November 2016.

Russell Redman’s experience:

Supermarket News - Informa
Senior Editor 
April 2018 - present

Chain Drug Review/Mass Market Retailers - Racher Press
Desk/Online Editor 
Sept. 2008 - March 2018

CRN magazine - CMP Media
Managing Editor
May 2000 - June 2007

Bank Systems & Technology - Miller Freeman
Executive Editor/Managing Editor
Dec. 1996 - May 2000

Supermarket News - Fairchild Publications
Financial Editor/Associate Editor
April 1995 - Dec. 1996 

Shopping Centers Today Magazine - ICSC 
Desk Editor/Assistant Editor
Dec. 1992 - April 1995

Testa Communications
Assistant Editor/Contributing Editor (Music & Sound Retailer, Post, Producer, Sound & Communications and DJ Times magazines)
Jan. 1991 - Dec. 1992 

American Banker/Bond Buyer
Copy Editor
Oct. 1990 - Jan. 1991 

This Week newspaper - Chanry Communications
Reporter/Editor
May 1989 - July 1990

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