Metro ready to face off against Walmart superstores

Grocery operator posts 13% profit increase

Grocery chain operator Metro says it won’t cower in the shadows of U.S. retail giant Walmart, which is making a bigger push into the food business.

Chief executive Eric La Fleche said he expected a “moderate” impact from the rising number of Walmart supercentres, which have been growing at a solid clip in eastern Quebec.

“Overall we’re defending pretty well,” La Fleche told analysts in a conference call on Wednesday, after reporting the company’s latest financial results.

Unlike older Walmart stores, supercentres stock a variety of fresh produce and meats and a broader selection of food items, which put them squarely in competition with the country’s largest grocery chains.

Quebec is one of the regions where Walmart has been aggressively building more supercentres. So far it operates 31 of them across the province, which also happens to be Metro’s home turf.

“We have a strong presence in this market and I’m confident we will defend well — but they will have an impact,” La Fleche said.

Metro grew its profits 13% in the third quarter as it benefited from stronger food sales across its stores. The chain reported net earnings of $163.5 million in the period ended July 4, an increase from $144.5 million a year earlier.

Metro’s total revenue for the quarter grew 6.1% to $3.84 billion.

Same-store sales, which track locations open at least a year, increased 4.3%.

In his outlook, La Fleche said fuel prices have started to creep back up again, which means the extra money consumers were spending is starting to trickle away.
“There’s still a benefit versus last year, but not at the same level as the second quarter,” he said.

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