The launch is one of several big changes at the grocer in what president and CEO Eric La Flèche calls a “transition year” for the grocer.
The company has completed the bulk of its transition to its new automated fresh and frozen distribution centre in Terrebonne, Que., with just dairy products left to make the switch.
It’s now gearing up to start the final phase of its automated fresh facility in Toronto this summer.
And with the launch of Moi at Metro and Food Basics stores in Ontario, Metro will withdraw from Air Miles and terminate its Thunder Bucks program.
The investments in new facilities, duplicate costs during the shift, and an impairment of assets related to withdrawing from Air Miles are among the factors that weighed on Metro’s second-quarter earnings as expected. But La Flèche said the changes are setting the company up for strength and growth in fiscal 2025.
“Next year will be a better year,” he said on a conference call with analysts on Wednesday.
“We’re going to see lower expenses next year, for sure.”
Metro reported its earnings for the second quarter were $187.1 million or 83 cents per diluted for the 12-week period ended March 16. The result was down from a profit of $218.8 million or 93 cents per diluted share a year earlier.
RBC analyst Irene Nattel said in a note the results were consistent with the company's guidance for the year as it executes on the final phases of investments in infrastructure and automation.
In Metro's earlier outlook for the financial year, it said it expected significant headwinds in 2024 due to the Terrebonne and Toronto investments. It said it expects to return to historical earnings growth after fiscal 2024.
Sales in the second quarter totalled $4.66 billion, up from $4.55 billion in the same quarter last year.
Food same-store sales were up 0.2 per cent in the quarter and up 2.7 per cent after adjusting for the Christmas week shift, while pharmacy same-store sales were up 5.9 per cent, boosted by a 6.0 per cent increase in prescription drugs and a 5.8 per cent gain in front-store sales.
The company’s discount banners continue to fuel growth, said La Flèche.
“Facing cost of living pressures all around, customers continued to shop carefully and search for value,” he said, adding that private-label sales are still outpacing national brands.
Consumers are continuing to trade down in specific categories, in particular meat, and are seeking out promotions, said Marc Giroux, executive vice-president and chief operating officer, on the analyst call.
On an adjusted basis, Metro said it earned 91 cents per diluted share in its latest quarter, down from 96 cents per diluted share a year earlier.
Shares in Metro rose 0.54 per cent to close at $70.28.
This report by The Canadian Press was first published April 24, 2024.
Companies in this story: (TSX:MRU)
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