Grocery Business Magazine

 

January 27, 2015

 

Metro’s La Fleche “cautiously optimistic” about 2015

Traffic increasing due to low fuel prices which leave customers with more to spend on food

 

Metro has started the year on a high note. Commenting on strong first quarter same-store sales and earnings numbers announced this morning just prior to its annual general meeting, which beat analysts’ estimates, Eric LaFleche, its chief executive officer, said his outlook for 2015 was “cautiously optimistic.”

 

“Falling oil prices are putting money in consumers’ pockets,” said La Fleche. “When you pay $20 $30 or $40 less each week at the pump, depending on the car you drive, that makes a difference. We are seeing the results in increased store traffic.”

 

Metro recorded sales of $2.84 billion for the 12 weeks ended December 20, 2014 (which is its first quarter for fiscal 2015). That is an increase of 5.2% compared to the same quarter last year. Even more impressive were same store sales which rose by 3.8%. That said, Metro has raised prices admitted La Fleche. Food inflation ran at 3% during the quarter, in large part due to the falling Canadian dollar, which is increasing the cost of imported foods. That is particularly true of produce, which Metro sources heavily in the US during the winter months.

 

Metro also made news by voting in a new slate of directors, which included two new women. Maryse Bertrand, who is 55 and a lawyer, is a vice-president in charge of legal services at the CBC and Stephanie Coles, 47 is a strategy consultant. This brings total female representation on the Metro board to five members, out of 14. According to a Metro spokesperson this is the highest percentage among the three industry majors at this time.

 

La Fleche, who appeared particularly confident at the press conference, following the strong numbers and shareholder approval of stock option compensation plans for its executives, also confirmed Metro’s continued increased focus on discount offerings, in the wake of the 2014 conversion of six Metro stores into Food Basics outlets. Ontario operations, which the company recently brought in Carmen Fortino to head up, will be particularly key to its success during the coming year said La Fleche, who noted that the former Loblaw executive will be helped by Metro’s recent moves to tighten operations there.

 

La Fleche said the recent Target store closings, which included the shuttering of several of Metro’s Brunet pharma outlets operating within them, were unlikely to have a material impact on its financial numbers. Longer term, as Micheal Van Aelst, an analyst with TD Securities, wrote in a recent note to clients, the effect of the 133 Target store closures on Metro’s operations, will depend on “who operates the leases once the dust settles.”

 

This morning also marked a sad note for Metro. Pierre Lessard, the company’s chairman and former long-time CEO, headed his last annual general meeting, after having hit the mandatory retirement age. Lessard leaves following nearly a quarter of a century of service at the company, which he joined in 1990, after an extensive stint at Provigo.

 

Alban D’Amours, a former CEO of the National Bank of Canada will take Lessard’s place at the helm.

 

peter@peterdiekmeyer.com

 

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