Metro Posts Double-digit Q4 Net Earnings Growth

Canadian grocer Metro Inc. reported fourth-quarter net earnings for the 13 weeks ended Sept. 29 of $145.1 million, or $1.46 per share, representing an impressive 75.9 percent increase, with adjusted net earnings of $123.4 million, or $1.24 per share, for a 27.8 percent rise over the year-ago period. Same-store sales for the fourth quarter of fiscal 2012 edged up 1.1 percent.

For the 53-week fiscal year ended Sept. 29, Montreal-based Metro posted net earnings of $489.3 million, or $4.84 per share, representing a 27.7 percent rise; while adjusted net earnings were up 18.3 percent to $470.6 million, or $4.65 per share. During this period, sales rose 5.4 percent to $12.0 billion, and same-store sales bumped up 1.2 percent.

Metro president and CEO Eric R. La Flèche attributed the satisfactory results to “our team’s excellent execution, effective cost control, and sustained investments in our network. While we expect competitive activity will remain strong in 2013,” continued La Flèche, “we will continue to emphasize our customer first strategies to drive our future growth.”

Sales in the fourth quarter and fiscal 2012 reached $2.9 billion and $12.0 billion, up 11.1 percent and 5.4 percent, respectively versus $2.6 billion and $11.4 billion for the corresponding periods last year. Metro’s 2012 fiscal year and fourth quarter were one week longer than last year, so excluding the extra week, fiscal 2012 and fourth-quarter sales increased 3.4 percent and 2.5 percent, respectively. Metro noted that it “experienced very modest inflation in the fourth quarter of 2012.”

Gross margins for the fourth quarter and fiscal 2012 were 18.5 percent and 18.4 percent, respectively, up from 17.7 percent and 18.1 percent for the year-ago periods. Metro attributed the increases to such factors as its merchandising strategies, a decrease of in-store losses, and its Adonis ethnic food stores.

Net earnings for the fourth quarter were $145.1 million, a rise of 71.9 percent from the $84.4 million logged in the year-ago period. Fully diluted net earning per share grew 75.9 percent to $1.46 from 83 cents last year, while adjusted net earnings in the quarter came to $123.4 million, and adjusted fully diluted net earnings per share were $1.24, for increases of 24.8 percent and 27.8 percent, respectively. Metro partly attributed the “significant increase” in adjusted net earnings for the fourth quarter of 2012 from the year-ago period to its share of earnings in convenience store operator Alimentation Couche-Tard and “the results for the 53rd week of 2012, when several fixed costs were no longer in effect.”

Net earnings for fiscal 2012 totaled $489.3 million, a 24.6 percent increase from the $392.7 million posted last year, while fully diluted net earnings per share were $4.84, compared with $3.79 last year, for a 27.7 percent rise. Adjusted net earnings for the fiscal year were $470.6 million and adjusted fully diluted net earnings per share were $4.65, increases of 15.6 percent and 18.3 percent, respectively.

Operating activities generated cash flows of $126.8 million in the fourth quarter and $546.1 million over fiscal 2012, versus $183.3 million and $542.4 million, respectively, in the year-ago periods. “This decrease is due primarily to net changes in non-cash working capital items that required greater outflows in the fourth quarter of 2012 compared to last year,” Metro explained.

During fiscal 2012, Metro and its retailers invested $281.8 million in their retail network, for a gross expansion of 383,200 square feet and a net expansion of 34,400 square feet, or 0.2 percent. The grocer completed major renovations and expansions of 19 stores, opened seven new stores and closed 11 stores.

Last month, Metro revealed a conditional agreement to dispose of its foodservice operation, the Distagro division, which supplies restaurant and gas station chains. The disposal, for a consideration of about $15 million, excluding working capital and a net gain after taxes of around $7 million, is expected to occur in the next few weeks.