Discount and conventional grocery gap narrowing: Metro CEO
After completing its billion-dollar supply chain transformation, Metro Inc.’s plan to grow its store network is well underway.
“The square footage growth for us is controlled. There was a bit of catch up last year. We have an ambitious—but I wouldn’t say too aggressive—program for this year in terms of adding new square footage,” president and chief executive Eric La Flèche told analysts Tuesday (Jan. 28).
Metro is opening a dozen new (mostly discount) stores this year, with two conversions already completed in the first quarter of fiscal 2025.
La Flèche said its discount banners—Food Basics, Super C—are still growing faster than its conventional stores, but that gap appears to be closing.
“Discount had strong growth for three years running. At some point, the market settles, and you come back to more normal levels of growth, and then the gap narrows between the two segments. That’s what we’re experiencing,” he said.
The comments follow similar statements made by Michael Medline, president and chief executive officer of Sobeys parent company Empire Co. Ltd.
In grocery, Metro is planning 21 major renovation projects this year. Thirty major projects are planned for its pharmacy business.
Metro reported net earnings of $259.5 million in its first quarter of fiscal 2025, up 13.6%. Adjusted net earnings were $245.4 million, up 4.4%.
Sales for the quarter totalled $5.12 billion, up 2.9%.
Food same-store sales rose 1%, or 2.4% when adjusting for the timing of two significant Christmas shopping days, which moved to the second quarter.
Pharmacy same-store sales increased 5.1%.
Online food sales were up 18.6% versus last year.
When adjusting for the sales tax holiday, Metro said its food basket inflation was slightly higher than the reported CPI for food purchased from stores.
READ: Metro CEO Eric La Flèche on tariffs, GST holiday, price increases and more
Marc Giroux, chief operating officer, said consumers are continuing to look for value across discount and conventional.
“Consumer confidence has been low since inflation has gone up and the cost of living has gone up over the last few years… Uncertainty is not helping with consumer confidence,” Giroux told analysts, pointing to the weakened Canadian dollar and the threat of U.S. tariffs.
La Flèche would not speculate on what may happen in the coming weeks regarding U.S. President Donald Trump’s threat to impose 25% tariffs on Canadian imports on Feb. 1.
“Our biggest concern is the Canadian dollar,” La Flèche said. “The CAD-US exchange rate is the risk on inflation for us in the short term, and that’s what we’re trying to manage as best we can and find the best sources of supply to mitigate the risk of cost increases. There’s pressure there, and at some point that has to be reflected in retail.”
