Summary

  • Metro Inc. is a food and pharmacy leader in Québec and Ontario with annual sales of $18 billion
  • As a retailer, franchisor, distributor, and manufacturer, the company has a network of 963 food stores under several banners including Metro, Metro Plus, Super C, Food Basics, Adonis and Première Moisson.
  • The company has 649 drugstores primarily under the Jean Coutu, Brunet, Metro Pharmacy and Food Basics Pharmacy banners.

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Company Overview

With annual sales of $18 billion, METRO INC (TSX:MRU, OTC:MTRAFU) is a food and pharmacy leader in Québec and Ontario.1

As a retailer, franchisor, distributor, and manufacturer, the company operates or services a network of some 950 food stores under several banners including Metro, Metro Plus, Super C and Food Basics, as well as some 650 drugstores primarily under the Jean Coutu, Brunet, Metro Pharmacy and Food Basics Pharmacy banners.

In all, some 1,600 points of sale and 15 distribution centres provide employment to more than 90,000 people, making METRO the largest private employer in Quebec.

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Company History

YearMilestonesDetail
1947Magasins Lasalle Stores ltée.A few independent grocery retailers decided to form a buying group that would enable them to offer its customers products at prices comparable to those of major food chains.
1956Le groupe des épiciers MetroThe “groupe des épiciers Metro” is founded, a division of Les Épiceries Lasalle Groceteria ltée. The new sign appears out front.
1972Marchés d'Aliments Metro ltée.25 years after it was founded, the company becomes les Marchés d'Aliments Metro ltée. The first stores offering the supermarket concept are created.
1986Montreal Stock ExchangeIn 1985,  the shareholders of Groupe des Épiciers Unis Metro-Richelieu Inc. unanimously agree to convert their advances into capital stock. One year later, they approve a Board of Directors proposal to list the Company, which has now become Metro-Richelieu Inc., at the Montreal Stock Exchange. An initial public offering is launched in November 1986.
1986McMahon Distributeur Pharmaceutique Inc.The purchase of McMahon Distributeur Pharmaceutique Inc. takes the Company into the pharmaceutical distribution sector.
1987La Ferme CarnavalMetro-Richelieu Inc. acquires La Ferme Carnaval Inc., which owns 14 Super Carnaval outlets, thereby achieving a major breakthrough in the discount food store segment.
1992SteinbergIn 1992, Metro-Richelieu Inc. concludes a major transaction that further strengthens its presence in the Greater Montreal area: it acquires the leases and rights to 48 Steinberg grocery stores.
1999LoebIn June 1999, METRO acquires the Loeb banner along with its two warehouses in Ottawa and a network of 41 supermarkets in Eastern and Northeastern Ontario.
2005A & P CanadaIn August 2005, METRO purchases all the shares of The Great Atlantic & Pacific Company of Canada (A & P Canada) for $1.7 billion. This acquisition places METRO second in terms of market share in each of the two largest Canadian markets, with 35% in Quebec and 24% in Ontario.
2009GPMETRO acquires 15 GP food stores in September 2009, consolidating its position in Eastern Quebec. These stores were owned by a family business founded 50 years before, and with which Metro had had a 40-year long association.
2011Marché AdonisIn October 2011, METRO announced that it had entered into a partnership agreement with Marché Adonis, a well-established ethnic food retailer in the Montreal region specializing in fresh and Mediterranean products and prepared meals. Under this partnership, METRO then held a 55% interest in Marché Adonis and in its distributor Phoenicia Products. Six years later, in December 2017, METRO acquired the remaining 45% of shares.
2014Première MoissonIn order to differentiate itself with a broader selection of premium bakery products, METRO announced on June 10, 2014, a partnership agreement with Première Moisson bakery. The founding Colpron-Fiset family retained 25% of Première Moisson's capital until September 2019 when it sold its remaining shares to METRO.
2018The Jean Coutu GroupMETRO INC. acquires The Jean Coutu Group (PJC) Inc. in the Spring of 2018. The combination of the two leading companies creates a $16-billion retail leader strongly positioned to cater to the growing consumer needs in food, pharmacy, health and beauty.

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Brands

Food

A network of some 950 food stores under several banners including Metro, Metro Plus, Super C and Food Basics.2

Metro and Metro Plus

The Metro banner, with its 328 stores including 119 Metro Plus stores in Quebec, is a leading Québec (198) and Ontario (130) supermarket chain.

Super C

The Super C banner operates 98 discount stores in Quebec. Under the concept of "Marché" and "Dépôt", consumers have access to a wide range of fresh and grocery products at great prices.

Marché Richelieu

The 52 Quebec stores are known for their friendly atmosphere and the freshness of their products - produce, baked goods, prepared foods and premium quality meats prepared by experienced butchers.

Les 5 Saisons

Over the years, the two Les 5 Saisons located in Outremont and Westmount have earned an enviable reputation as grocers who specialize in sought-after, high-end products from Québec and elsewhere around the world.

Food Basics

Food Basics is a discount store providing low priced quality products to value-seeking customers in 142 locations across Ontario.

Marché AMI

The AMI banner first appeared in the Quebec City area in 1962. The name is derived from the Association des Marchands Indépendants (independent merchants' association). In addition to grocery products, these 306 small stores offer meat, fruits and vegetables, dairy products, frozen foods, bakery products and prepared meals.

Servi Express and Dépanneurs Gem Convenience Stores

This concept of independent convenience stores also offers a grocery section designed to meet the special needs of customers. The banner has flexible guidelines to meet retailers' operating requirements. Some stores offer bakery products, delicatessen items, pastries, prepared meals, fruits and vegetables, and frozen products. There are 339 of these convenience stores in Quebec.

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Pharmacy

A network of some 650 drugstores primarily under the Jean Coutu, Brunet, Metro Pharmacy and Food Basics Pharmacy banners.3

Jean Coutu

Founded in 1969, the Jean Coutu network is one of the most trusted names in Canadian pharmacy retailing, with 419 franchised stores in Quebec, New Brunswick and Ontario under the banners PJC Jean Coutu, PJC Santé and PJC Santé Beauté. The company's goal is to offer customers all the advantages of a large drugstore chain while still retaining the personalized service offered by a local pharmacist.

Brunet

Established in 1855, Brunet’s engagement is to provide Quebecers with personalized advice and services related to their health. As a subsidiary of McMahon Distributeur pharmaceutique inc., Brunet manages a network of 157 pharmaceutical establishments under the Brunet, Brunet Plus and Brunet Clinique. Brunet is also over 210 pharmacist owners and 3,000 employees that have the health and well-being of Quebecers at heart. And because health is all that matters, Brunet continues its development by continuously improving its products and services, through strategic partnerships, technological innovations and concrete actions within the community.

Food Basics Pharmacy

The Food Basics Pharmacy banner is located in 29 Food Basics grocery stores. Food Basics Pharmacy is a full-service pharmacy and offers customers professional services such as health reminders, medical profiles, blood pressure monitoring, medication and syringe disposal, as well as drive-through service in select locations. The pharmacy team is dedicated to providing customers with quality patient-focused health care.

Metro Pharmacy

The Metro Pharmacy banner is located in 46 select Metro grocery stores. The Metro Pharmacy is dedicated to delivering exceptional patient-focused care. Professional pharmacy services include personalized medical profile, medication waste and syringe disposal, blood pressure monitoring and a diabetes patient care program. The Metro Pharmacy also organizes a variety of health days for customers.

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Financial Highlights

Sales for Fiscal year ended September 25, 2021 totalled $18,283.0 million, up 1.6% compared to $17,997.5 million for Fiscal 2020 as the company cycled exceptionally strong sales last year due to the pandemic but up 9.0% over two years. Food same-store sales were up 1.5% (up 9.7% in 2020) and increased 11.3% compared to 2019. Online food sales in 2021 increased by 60% versus last year while online sales nearly tripled in 2020. Pharmacy same-store sales were up 3.4% (4.3% in 2020), with a 6.3% increase in prescription drugs and a 2.5% decrease in front-store sales.4

Operating income before depreciation and amortization for Fiscal 2021 totalled $1,732.5 million or 9.5% of sales, up 2.9% versus last year. During Fiscal 2020, the company recognized a loss of $7.5 million on the disposal of its meal-kit subsidiary. Excluding this item, adjusted operating income before depreciation and amortization for Fiscal 2021 increased by 2.4% versus last year.

Gross margin on sales for Fiscal 2021 was 20.0% versus 19.9% for Fiscal 2020.

Operating expenses as a percentage of sales for Fiscal 2021 were 10.5%, flat versus Fiscal 2020. The costs related to COVID-19 for Fiscal 2021 were approximately $104 million, including $24 million of gift cards to front-line employees, compared to $137 million in 2020. This decrease of $33 million was offset by an increase in other operating expenses, mainly related to activities and services that have been reinstated after initially being halted at the start of the pandemic, and non-recurring costs of approximately $10 million related to the transition to its new fresh distribution center in Ontario.

Total depreciation and amortization expense for Fiscal 2021 was $478.3 million versus $462.5 million for Fiscal 2020. This increase reflects the additional investments in supply chain and logistics as well as in-store technology. Net financial costs for Fiscal 2021 were $133.5 million compared with $136.8 million for 2020.

The income tax expense of $295.0 million for Fiscal 2021 represented an effective tax rate of 26.3% compared with an income tax expense of $287.9 million for Fiscal 2020 which represented an effective tax rate of 26.6%.

Net earnings for Fiscal 2021 were $825.7 million compared with $796.4 million for Fiscal 2020, while fully diluted net earnings per share were $3.33 compared with $3.14 in 2020, up 3.7% and 6.1% respectively, and up 15.6% and 19.8% respectively on a two-year basis. Excluding the specific items shown in the table below, adjusted net earnings for Fiscal 2021 totalled $854.2 million compared with $829.1 million for Fiscal 2020, and adjusted fully diluted net earnings per share amounted to $3.44 versus $3.27, up 3.0% and 5.2% respectively, and up 16.8% and 21.1% respectively over two years. The impact of the labour conflict at the Jean Coutu distribution center in the first quarter of Fiscal 2021, was approximately $0.05 per share.

1Q 2022 Result

Sales in the first quarter of Fiscal 2022 remained strong, reaching $4,316.6 million, up 0.9% compared to $4,278.2 million in the first quarter of 2021, and up 7.1% over two years. Food same-store sales were down 1.4% versus the same quarter last year (up 10.0% in 2021) but increased 8.5% compared to the first quarter of 2020. Online food sales were flat versus last year (up about 170% in 2021). The company's food basket inflation was approximately 3.5% (2.0% in the previous quarter). Pharmacy same-store sales were up 7.7% (1.3% in 2021), with a 7.1% increase in prescription drugs due to an uptick in physician visits and a 8.9% increase in front-store sales supported by strong Over-The-Counter growth, particularly Cough & Cold products and the lower sales last year as a result of the labour conflict.5

Operating income before depreciation and amortization for the first quarter of Fiscal 2022 totalled $424.1 million, or 9.8% of sales, an increase of 6.2% versus the corresponding quarter of Fiscal 2021. Gross margin on sales for the first quarter of Fiscal 2022 was 19.9%, versus 19.7% for the corresponding period of 2021.

Total depreciation and amortization expense for the first quarter of Fiscal 2022 was $112.5 million versus $107.3 million for the corresponding quarter of 2021. This increase reflects the additional investments in supply chain and logistics as well as in-store technology. Net financial costs for the first quarter of Fiscal 2022 were $28.7 million compared with $31.4 million for the corresponding quarter of 2021.

The income tax expense of $75.2 million for the first quarter of Fiscal 2022 represented an effective tax rate of 26.6% compared with an income tax expense of $69.3 million and 26.6% in the first quarter of Fiscal 2021.

Net earnings for the first quarter of Fiscal 2022 were $207.7 million compared with $191.2 million for the corresponding quarter of 2021, while fully diluted net earnings per share were $0.85 compared with $0.76 in 2021, up 8.6% and 11.8% respectively, and up 22.0% and 26.9% respectively on a two-year basis. Excluding the specific item shown in the table below, adjusted net earnings for the first quarter of Fiscal 2022 totalled $214.2 million compared with $197.7 million for the corresponding quarter of 2021, and adjusted fully diluted net earnings per share amounted to $0.88 versus $0.79, up 8.3% and 11.4% respectively, and up 18.4% and 23.9% respectively over two years. The labour conflict at its Jean Coutu distribution center had an unfavorable impact of approximately $0.05 on the fully diluted net earnings per share of the first quarter of 2021.

Recent developments

Opening of the new Metro Plus Wilderton an investment of over $10 million6

February 24, 2022 –  Tony Brunelle, owner of Metro Plus Wilderton, proudly opened his brand-new store this morning located at 2875 Van Horne Avenue in the Côte-des-Neige– Notre-Dame-de-Grâce borough of Montreal. Closed since January 2019, the rebuilt supermarket has reopened its doors to customers, offering them a new and modern experience. The nearly 40,000-square-foot store, now under the Metro Plus banner, required an investment of more than $10 million.

The new Metro Plus has been designed to ensure an optimal shopping experience and giving its product assortment the importance they deserve. The store offers all the freshness, product diversity and quality of service that Metro has been known to deliver for nearly 75 years. This reopening also creates approximately 30 additional jobs compared to the team in place in 2019, bringing the total number of employees to 120.

Fresher and more complete

Freshness, one of Metro’s top priorities, is omnipresent inside the store. The impressive produce department features local and seasonal products, as well as fresh-cut fruit, smoothies and flavoured waters, along with a vegan section that offers a multitude of alternative products. In addition, the bakery has a wide variety of artisanal local products featuring renowned Québec company Première Moisson as well as famous baklavas from Adonis.

To meet the needs of all its customers, the Wilderton supermarket now offers a kosher section, including a fridge of meats and other kosher specialties. Customers will also be able to choose from a large selection of nuts in bulk in the 16-foot section reserved for this purpose.

Over 100 ready-to-eat meals prepared by on-site chefs using fresh products are available every day in the “Fresh to Go” aisle, such as delicious shish taouk from Adonis. The food market includes an Aki Sushi counter offering a selection of delicious high-end sushi. Customers will also be able to enjoy tasty pizzas that are prepared and baked on-site. The cheese and deli counters are better stocked than before and offer a wide variety of quality products.

The fish counter now includes a fish smoker and a 2.0 bulk seafood bar with more variety, including pre-packaged fish for customers. A team of professionals behind the service counter provide advice and prepare a wide range of fresh and tasty seafood products.

In the butcher’s department, professional teams prepare fresh cuts to order, suggest products, and offer tips to prepare and cook meats perfectly. A wide variety of meats are available, including smoked, organic and ready-to-cook.

References

  1. ^ https://corpo.metro.ca/en/media/about-metro.html
  2. ^ https://corpo.metro.ca/en/about-us/food.html
  3. ^ https://corpo.metro.ca/en/about-us/pharmacy.html
  4. ^ https://corpo.metro.ca/userfiles/file/PDF/Rapport-Annuel/2021/en/2021_Rapport%20annuel_EN.pdf
  5. ^ https://corpo.metro.ca/userfiles/file/PDF/Rapport-Annuel/2022/2022-Q1-Interim-Report-EN-10Q.pdf
  6. ^ https://corpo.metro.ca/en/media/newsroom/2022/opening-of-the-new-metro-plus-wilderton.html
Created by Asif Farooqui on 2022/03/01 10:21
     

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