Metro Increases Sales, Profits in Q1

Metro (TSE: MRU) reported higher sales and profits in the first quarter of 2022 than a year earlier. The food and pharmacy retailer owns banners including Metro, Super C, and Food Basics.

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Sales & Earnings

Sales came in at C$4.32 billion for the quarter ended December 18, an increase of 0.9% from C$4.28 billion in the prior-year quarter. In addition, food same-store sales decreased by 1.4%, while pharmacy same-store sales increased by 7.7%.

Meanwhile, Q1 2022 profit was C$207.7 million (C$0.85 per diluted share), up 8.6% from a profit of C$191.2 million (C$0.76 per diluted share) in Q1 2021.

On an adjusted basis, Metro earned C$214.2 million (C$0.88 per diluted share) for the quarter, compared to adjusted earnings of C$197.7 million (C$0.79 per diluted share) a year ago.

On January 24, 2022, the Board of Directors declared a quarterly dividend of C$0.275 per share, an increase of 10.0% over the same quarter last year.

CEO Commentary

Metro president and CEO Eric La Flèche said, “We delivered strong results in our first quarter of 2022, driven by continued sales growth on top of record sales last year and good expense control. Our industry is facing higher than normal inflationary pressures and our teams are working hard to provide the best value possible to our customers. The rapid spread of the omicron variant since the end of the quarter has caused challenges in our operations and I want to thank all our front-line employees for their commitment in these trying times. Today we are unveiling our 2022-2026 Corporate Responsibility Plan which builds on the progress we achieved over the last decade and sets ambitious goals for the company in the context of global sustainable development.”

Outlook

Metro expects its food business to remain relatively flat in the near term as restaurant closures and telecommuting persist.

As for the Pharmaceutical division, Metro anticipates growth in turnover compared to last year with the launch of the distribution of rapid tests for the detection of COVID-19 in its network, as well as restrictive government measures.

Wall Street’s Take

Last week, RBC Capital analyst Irene Nattel maintained a Hold rating on MRU with a price target of C$70. This implies 8.5% upside potential.

The rest of the Street has given a Moderate Buy rating on MRU based on two Buys and five Holds. The average Metro price target of C$69.43 implies 7.6% upside potential to current levels.

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