Shoppers are still searching for more affordable options at the grocery store even as food inflation eases, according to Metro Inc.
The Montreal-based grocer released its second-quarter earnings on Wednesday and reported that profit fell compared with a year ago as its sales edged higher.
Metro says 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.
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.
Front-store pharmacy sales got a boost in the second quarter due to a strong cough and cold season in Canada, Metro CEO Eric La Fleche told analysts on the company’s earnings call Tuesday morning.
Cash-strapped consumers are swapping to Metro’s private labels on products like meat as they continue to feel squeezed by rising cost of living pressures, according to Marc Giroux, Metro’s executive vice-president and chief operating officer for food.
That comes despite signs that food inflation has been easing at the grocery store. Annual inflation at the grocery store declined to 1.9 per cent in March, Statistics Canada reported last week,, continuing a trend of cooling price pressures in recent months.
“While food inflation is stabilizing overall, the economic context is putting lots of pressure on key consumers. So consumers are continuing to trade down,” Giroux told analysts on Metro’s earnings call Tuesday.
Metro to expand Moi Rewards program beyond Quebec
On Wednesday, the company also said it’s launching its Moi Rewards loyalty program in all Metro and Food Basics stores later this year. It will withdraw from Air Miles and terminate its Thunder Bucks program later this year as part of the shift.
The company said the program already has more than 2.5 million active members in Quebec after launching in May last year.
“We are excited to expand the Moi Rewards program to the Ontario market for our Metro and Food Basics customers. Moi Rewards will be simple to use, personalized, and it will provide customers with great savings and choices in line with their personal tastes,” said Alain Tadros, vice president and chief marketing officer and digital strategy at Metro, in a release Tuesday alongside the company’s earnings report.
On an adjusted basis, Metro says it earned 91 cents per diluted share in its latest quarter, down from 96 cents per diluted share a year earlier.
Metro says it earned $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.
Sales in the quarter totalled $4.66 billion, up from $4.55 billion in the same quarter last year.
RBC analyst Irene Nattel said 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 with the launch of its automated distribution centre in Terrebonne, Que., and the launch of the final phase of its automated fresh produce plant in Toronto. It said it expects to return to historical earnings growth after fiscal 2024.
– with files from the Canadian Press