Metro Inc. ((TSE:MRU)) has held its Q1 earnings call. Read on for the main highlights of the call.
Invest with Confidence:
- Follow TipRanks' Top Wall Street Analysts to uncover their success rate and average return.
- Join thousands of data-driven investors – Build your Smart Portfolio for personalized insights.
In its latest earnings call, Metro Inc. delivered a generally positive outlook, highlighting strong revenue growth in both the food and pharmacy segments. The company also reported successful expansion of its online sales and effective tax management strategies. However, challenges such as increased operating expenses, inflationary pressures, and the impact of calendar shifts on sales were also noted.
Solid Revenue Growth
Metro Inc. reported a commendable increase in total sales by 2.9%, reaching $5.12 billion compared to the same period last year. Notably, food same-store sales rose by 2.4% after accounting for calendar adjustments, demonstrating the company’s ability to maintain growth in its core segment.
Pharmacy Segment Performance
The pharmacy segment showed robust performance with same-store sales growing by 5.1%. This growth was driven by a 7.3% increase in prescription sales, attributed to organic growth and the rising demand for specialty medications.
Online Sales Expansion
Metro’s online sales saw an impressive 18% growth for the quarter. This was supported by strategic third-party partnerships and the expansion of click-and-collect services, showcasing the company’s adaptation to the evolving retail landscape.
Dividend Growth
Reflecting its financial strength, Metro’s Board declared a quarterly dividend of $0.37 per share, marking a 10.4% increase from the previous year. This announcement continues the company’s 31-year tradition of annual dividend growth.
MOI Rewards Program Success
The newly launched MOI Rewards program in Ontario has been well-received, amassing over 4 million members. This success has translated into increased customer traffic and spending, reinforcing Metro’s customer engagement strategy.
Effective Tax Management
Metro benefited from effective tax management practices, including a resolution of a prior income tax position which resulted in a $20.6 million gain and a $6.1 million provincial tax holiday, aiding the company’s financial results.
Operating Expense Increase
The company experienced a 4.4% increase in operating expenses, totaling $528.5 million. This rise was influenced by the launch of the MOI Rewards program and professional fees related to a tax gain.
Impact of Calendar Shift
Metro’s sales were negatively impacted due to the transfer of two significant pre-Christmas shopping days to the second quarter, affecting the comparative sales figures.
Inflationary Pressures
The company faced challenges from inflationary pressures on commodity prices and the impact of a weaker Canadian dollar, which affected its cost management strategies.
Forward-Looking Guidance
Metro Inc. provided solid forward-looking guidance, reaffirming its long-term growth target of 8% to 10% in adjusted net earnings per share. The company reported an adjusted net earnings rise of 4.4% to $245.4 million and completed two store conversions, expanding its food retail network by 18,300 square feet. Metro also repurchased 1.425 million shares at an average price of $9.95, further demonstrating its commitment to shareholder value.
In conclusion, Metro Inc.’s earnings call showcased a generally optimistic sentiment, backed by strong revenue growth and strategic expansions. Despite facing challenges such as increased expenses and inflationary pressures, the company remains confident in its growth trajectory and is committed to delivering value to its shareholders.
