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Metro adjusts to new normal under COVID-19

Safety protocols put in place in response to the pandemic are driving operational costs, but the Quebec-based grocer says it will find a way to offset the expense

Sales at Metro increased in its second quarter--and remained steady heading into Q3--as the grocer contends with higher operating costs related to increased safety measures put in place during the COVID-19 pandemic.

Stepped-up sanitation processes and Plexiglass barriers at cash are among the initiatives Metro has adopted over the last couple months to help keep store staff and shoppers protected from the spread of the virus.

READ: Metro sales up as shoppers started stocking up amid COVID-19

These measures will remain in place for the foreseeable future as Metro adjusts to what could become the "new normal," said its president and CEO Eric La Flèche. Though sales have levelled off, they will still be strong enough to cover the added expense, he said.

"The new normal is what customers are going to expect in terms of cleanliness ... some of that will be with us for a while so some of those expenses will stay down the road, so it’s our job to find a way to offset them," said La Flèche during a quarterly call with analysts Wednesday morning.

Metro reported sales for the quarter totalled $3.99 billion, up from $3.70 billion a year earlier, and food same-store sales were up 9.7% for the quarter, which ended on March 14. Excluding the COVID-19 impact, Metro said sales were up 5.2%. And, between March 15 and April 11, the company saw same-store food sales rise 25% year over year.

Sales for the quarter totalled $3.99 billion, up from $3.70 billion a year earlier. Metro's chief financial officer François Thibault said approximately $125 million of the increase was a result of COVID-19 related shopping.

The World Health Organization officially declared COVID-19 a pandemic the last week of Metro's second quarter, but La Flèche said stockpiling in Ontario began Feb. 28, followed by Quebec a week later, as shoppers stocked up on cleaning supplies, hand sanitizer and, of course, toilet paper.

Customers are visiting the stores less frequently, said La Flèche, but when they do it's for a "much bigger and fuller shop," he said. Throughout the call, La Flèche reminded analysts he did not have a crystal ball, but said he expected this behaviour to continue until parts of the economy reopen and Canadians returns to work. Eventually, shopping "will return to more trips and smaller baskets, but I think we have some time ahead of us," he said.

La Flèche said Metro ran fewer promotions in the quarter, reducing both the page count and the number of items it featured in its weekly flyers. This was to avoid product shortages and stressing the supply chain, a request that came from some of its vendors and also some Metro stores.

Adding to Metro's operating expenses is the $2-per-hour wage increase for grocery store staff and warehouse workers that the grocer introduced in March. Originally effective retroactively from March 8 and until May 2, Metro recently extended the increase to May 30. La Flèche said the company would reexamine the increase at that time.


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