Metro Inc. said Wednesday that its earnings surged in its latest results, fuelled by higher same-store sales and a favourable tax ruling, as the company faces an ongoing strike at 27 of its Greater Toronto Area stores.
In the quarter ended July 1, the grocery and drugstore retailer said net earnings skyrocketed 26 per cent to $346.7 million from $275 million a year earlier.
Metro said the massive gains in its third quarter are due in part to a tax benefit after the Canada Revenue Agency granted capital losses to the company that had previously been disallowed.
Nonetheless, adjusted net earnings rose 11 per cent to $314.8 million last quarter from $283.8 million the year before, while adjusted fully diluted net earnings leaped 14 per cent to $1.35 per share from $1.18 per share.
The adjusted profits, which beat analyst expectations of $1.29 per share according to financial markets data firm Refinitiv, come as 3,700 Metro workers are on strike as they push for higher pay and other improvements.
Workers walked off the job July 29 after rejecting a tentative agreement reached with the union bargaining committee, to the disappointment of the company.
“We are clearly disappointed, given that we have worked constructively with the union and the employees bargaining committee to reach a very good agreement providing significant pay increases that they unanimously recommended to the employees,” said chief executive Eric La Flèche on an earnings call Wednesday.
“We remain committed to the bargaining process and look forward to a resolution and the reopening of our stores as soon as possible, while ensuring the long term competitiveness of our company.”
Unifor national president Lana Payne said in a statement that the company’s profits show Metro has “no excuses” not to meet worker demands as the union called for the company to come back to the table with an improved wage offer.
The Montreal-based company said sales increased by 10 per cent to $6.43 billion from $5.87 billion a year prior, boosted by same-store sales growth of nine per cent.
The company’s gross margin on food was down slightly from last year as the company absorbed more food inflation costs, and as customers continue to shift to discount brands, said La Flèche.
“There are limits to what we can charge to our customers.”
The company said in its outlook that it is seeing some moderation in food inflation, but that it remains elevated compared with pre-pandemic levels.
It said that as part of its push for competitiveness it will be launching a state-of-the-art automated distribution centre north of Montreal in the coming weeks.