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Metro raises quarterly dividend, reports $170.2M Q1 profit

Quebec-based grocery company says first-quarter sales totalled nearly $4.03 billion

Metro Inc. saw sales rise for the first quarter of its 2020 financial year, but its earnings fell just short of analysts' expectations.

The year "is off to a good start with solid revenue and earnings growth in a very competitive environment," said CEO Eric La Flèche in a statement as the company released its first-quarter results Tuesday.

The grocery and pharmacy chain reported sales of nearly $4.03 billion for the quarter ended Dec. 21, up from nearly $3.98 billion in the same quarter the previous year.

Same store sales, a key retail metric, at its food stores rose 1.4%, the company said, while the same metric at its pharmacies jumped 3.6%.

Grocery store same-store sales would have been higher--up 2%--if the shift in Christmas sales is taken into account, Metro said.

The company reported a profit of $170.2 million or 67 cents per diluted share for the quarter compared with a profit of $203.1 million or 79 cents per diluted share in the same quarter the previous year when its results were boosted by the sale of its investment in Colo-D Inc.

On an adjusted basis, Metro earned $180.9 million or 71 cents per diluted share in the quarter, up from an adjusted profit of $172.2 million or 67 cents per diluted share a year ago.

Analysts on average had expected a profit of 74 cents per share, according to financial markets data firm Refinitiv.

These results are "not quite squeaky clean," wrote Irene Nattel, an RBC Dominion Securities Inc. analyst, in a note, which she said is "unusual for this company."

She noted analysts had also forecast slightly higher adjusted same-store sales at grocery stores at 2.8%.

"Given the company's long track record of consistent performance, we are prepared to give the benefit of the doubt," Nattel wrote.

She said she chalks up the first-quarter shortfall to several things, including a calendar shift, and remains confident in the company's ability to deliver strong results.

The grocer also announced it raised its dividend. It will pay a quarterly dividend of 22.5 cents per share compared with its previous payment of 20 cents per share.

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