Metro Inc. MRU-T -3.59%decrease reported a 4-per-cent increase in profits in the first quarter, and boosted the dividend paid to shareholders, as the grocery retailer emerges from a “transition year” and says it plans to return to growth.
On Tuesday, the Montreal-based grocer reported adjusted net earnings of $245.4-million or $1.10 per share, compared to $235-million or $1.02 per share in the same period the prior year. The numbers were adjusted to account for the favourable resolution of a tax position in prior years, which negatively affected this year’s earnings, as well as other items. On an unadjusted basis, net earnings grew to $259.5-million in the quarter ended Dec. 21, 2024, compared to $228.5-million in the prior year.
Metro executives had said fiscal 2024 would be an unusual year, as the company invested more than usual in upgrades to its supply chain, weighing on profits. The spending included transitions to new distribution centres with greater automation in both Quebec and Ontario last year. According to Metro, this has resulted in greater efficiency in its operations and improved service to its stores.
Executives have previously said that they expected earnings growth to resume in fiscal 2025. On Tuesday, the company provided an outlook saying that profit growth should “gradually resume” this year, and reiterated a previously disclosed target for the medium and long term, of 8 to 10 per cent growth in adjusted net earnings per share annually.
On Tuesday, Metro announced it had increased its dividend by 10.4 per cent, to 37 cents per share.
First-quarter revenue grew by 2.9 per cent compared to the same quarter the prior year, to $5.1-billion.
Same-store sales – an important industry metric, which tracks sales growth not tied to new store openings – rose by 1 per cent at the company’s grocery stores, and 5.1 per cent at its pharmacies, including the Jean Coutu drugstore chain. Pharmacy sales included a 7.3-per-cent increase in prescription drugs and a 0.5-per-cent increase in sales in the front of the store.
The sales results were affected by a shift in the calendar, as Metro’s first quarter the previous year ended on Dec. 23 rather than the 21st. That meant this quarter’s results included two fewer days of the busy pre-Christmas shopping period compared to the year before. Adjusting for this shift, same-store sales grew by 2.4 per cent at the grocery stores, and pharmacy front-store sales were up 1.9 per cent, the company reported.
Online grocery sales grew by 18.6 per cent compared to the previous year.
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