Metro warns of food cost increases as food manufacturers pass on higher costs | national company

Canada’s grocery industry is facing rising inflation and further food cost increases are expected to hit supermarkets in the coming months, the head of one of the country’s largest grocery chains said on Wednesday. .

Metro CEO Eric La Flèche said food makers were under inflationary pressures and had begun to pass those cost increases on to grocers.

“There are cost increases ahead due to commodity issues, weather issues and labor costs at suppliers,” he told analysts on a conference call. .

“We are working hard to contain these costs and ensure that we are competitive in the market.”

The Montreal-based grocery and drugstore retailer reported an uptick in fourth-quarter profits on Wednesday, even as grocery sales fell slightly as public health measures were eased and consumers are returned to the restaurant during the summer.

However, La Flèche said rising inflation is having shoppers looking for value, with some restaurants potentially foregoing more cooking at home.

“Restaurants opened this summer, we certainly felt that, but our feeling is that consumers are consuming more at home right now than they were during the summer,” he said.

Still, customers might start noticing higher prices at grocery stores, as well as potentially some missing products.

Metro said food basket inflation was around 2% in the fourth quarter, double the 1% recorded in the previous quarter.

La Flèche said meat and dairy products were the main drivers of rising costs at Metro grocery stores.

Statistics Canada said on Wednesday that the annual pace of inflation in October rose to 4.7%, as the consumer price index posted its biggest year-over-year increase since February 2003. The increase follows a 4.4% year-over-year increase in September.

Supply chain issues are also leading to shortages of certain products on grocery store shelves.

“There are (storage units) that continue to struggle to stock up and get the quantities we want,” La Flèche said. “There are certain key things where we are on allocations, the whole industry is.”

Metro posted fourth-quarter earnings of $194 million or 79 cents per diluted share, compared with earnings of $186.5 million or 74 cents per share in the same quarter a year earlier.

Sales for the quarter totaled $4.09 billion, compared to $4.14 billion in the same quarter last year, when the company said it had exceptionally strong sales due to the pandemic.

La Flèche said the company reported growth in net profit in the fourth quarter “despite a drop in sales when we had exceptional sales last year”.

“As government restrictions eased over the summer, some food consumption shifted to restaurants,” he said in a report to shareholders. “However, our food sales continue to compare favorably to pre-pandemic levels.”

The company, which operates under several banners including Metro, Metro Plus, Super C and Food Basics grocers, as well as pharmacies under the Jean Coutu, Brunet, Metro Pharmacy and Drug Basics banners, said food sales like-for-like stores decreased by 2.9%. compared to a year ago, while same-store drugstore sales increased 4.1%.

On an adjusted basis, Metro said it earned 81 cents per diluted share, compared to adjusted earnings of 77 cents per diluted share a year ago.

Analysts on average had expected adjusted earnings of 80 cents per share and $4.14 billion in sales, according to estimates compiled by financial markets data firm Refinitiv.

This report from The Canadian Press was first published on November 17, 2021.

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