Second-quarter Sales, Earnings Surge at Metro in Canada

MONTREAL -- Noting its "very solid" financial position, and still flush from its acquisition of A&P's Canadian division, Canadian supermarket operator Metro, Inc., yesterday posted second-quarter sales of CAN $2.4 billion (US $2.1 billion), a 75.5 percent jump.

Sales for the first 24 weeks of the fiscal year rose 75 percent to CAN $4.9 billion (US $4.3 billion), compared with $2.8 billion last year. Including A&P Canada stores, same-store sales increased 1.6 percent. Excluding the CAN $1 billion and CAN $2.1 billion in sales growth resulting from A&P Canada acquisition, second-quarter and 24-week period sales growth would have been 0.5 percent, the company noted.

The company also reported net earnings of CAN $57 million (US $49.9 million) in the second quarter of 2006 ended March 11, vs. $44.7 million for the year-ago period, a 27.5 percent leap; and net earnings per share of 49 cents compared with 46 cents last year, a rise of 6.5 percent. Without integration and rationalization costs of CAN $2.6 million (US $2.3 million) related to the A&P Canada acquisition, adjusted net earnings for the second quarter of 2006 would have been $58.7 million, a 31.3 percent increase over year-ago period, and adjusted fully diluted net earnings per share would have been 50 cents vs. 46 cents last year, a 8.7 percent rise.

Taking into account integration and rationalization costs and additional tax expense, net earnings for the first 24 weeks were CAN $89 million (US $77.9 million) vs. CAN $83.3 million last year, a 6.8 percent rise.

"During the second quarter, we continued the implementation of our integration and rationalization plan following the acquisition of A&P Canada," Metro said in a statement. "We have identified three main lines, namely stores and distribution centers, common services, and implementing our information systems at A&P Canada. Regarding Ontario stores, we are converting some discount stores to different banners and closing a few others. We are also streamlining both common services shared by Quebec and Ontario operations, and our distribution centre operations. In the coming quarters, the impacts of the plan with regard to A&P Canada operations will be presented in the purchase price allocation as they are evaluated."

During the first 24 weeks of fiscal 2006 the company invested CAN $133.8 million (US $117.1 million) in its retail network for a gross expansion of 246,000 square feet, or 1.3 percent. Metro completed 18 major renovations and expansions and opened 14 new stores in that time.

"Over the next few quarters, we will complete our purchase price allocation for A&P Canada, and continue to work toward achieving combined annual synergies estimated at $60 million, starting with $35 million in 2006 and an additional $25 million in 2007. We will also work on implementing our integration and rationalization plan, and our information systems to A&P Canada's operations," noted Metro president and c.e.o. Pierre H. Lessard.
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