Release Date: November 20, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Metro Inc (MTRAF, Financial) reported a solid fourth quarter with strong comparable sales growth in both food and pharmacy sectors.
- The company completed its seven-year, nearly $1 billion supply chain modernization project, enhancing future growth capacity and efficiency.
- Online sales grew by 27% on a 12-week comparable basis, driven by third-party partnerships and the expansion of click-and-collect services.
- The pharmacy division delivered strong performance with a 5.7% increase in same-store sales, supported by organic growth and specialty medications.
- Metro Inc (MTRAF) launched the Moi Rewards program in Ontario, achieving over 1 million enrollments in less than four weeks, indicating strong customer engagement.
Negative Points
- Total sales decreased by 2.6% compared to the same period last year, although this was partly due to a 53-week year in 2023.
- Net financial costs increased due to higher debt levels and interest rates, impacting overall financial performance.
- Adjusted net earnings slightly decreased by 1% compared to the previous year, reflecting challenges in maintaining profitability.
- The company faces ongoing competitive pressures in both food and pharmacy sectors, requiring effective promotional strategies to maintain market share.
- E-commerce growth, while strong, remains less profitable than brick-and-mortar operations, posing a challenge to overall margin improvement.
Q & A Highlights
Q: Can you discuss the consumer value-seeking behavior and its impact on your business?
A: Eric La Fleche, President and CEO, noted that the value-seeking behavior has been consistent over the past few years, with customers buying more on promotion and opting for private labels. This trend is observed in both food and pharmacy sectors, and Metro is well-positioned to meet these needs across all its brands.
Q: What are your expectations for fiscal 2025, particularly regarding profit growth and supply chain costs?
A: Francois Thibault, CFO, explained that profit growth is expected to gradually resume as they continue to ramp up their fresh distribution center in Toronto and improve metrics at other centers. The reduction in duplicated costs will be gradual, but they plan to achieve their EPS growth objectives for fiscal 2025.
Q: How is the Moi Rewards program performing in Ontario compared to Quebec?
A: Eric La Fleche, President and CEO, and Marc Giroux, COO, reported a strong start in Ontario with over 1 million enrollments in four weeks. The program is expected to reach previous metrics quickly, with positive customer feedback on the ease of point accumulation and redemption.
Q: With major supply chain investments complete, should we expect more executive changes in the near term?
A: Eric La Fleche, President and CEO, stated that the succession plan is proceeding as expected, with internal candidates filling key positions. They are currently searching for a new CFO, but no major changes are anticipated beyond normal succession planning.
Q: Can you provide insights into the pharmacy segment's growth drivers and future expectations?
A: Jean-Michel Coutu, President of the Pharmacy division, highlighted strong organic growth, specialty medications, and professional services as key drivers. They plan to continue investing in their network with major renovations and expansions, aligning with the growing demand for clinical services.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
