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Metro expands online grocery offerings as e-commerce sales jump 160 per cent

MONTREAL — Metro Inc., one of the country's top three grocery retailers, is expediting its push into online food ordering and home delivery, as e-commerce grocery sales continue to beat expectations.

MONTREAL — Metro Inc., one of the country's top three grocery retailers, is expediting its push into online food ordering and home delivery, as e-commerce grocery sales continue to beat expectations. 

The Montreal-based company, which includes the eponymous grocery store chain, said Wednesday it's opening a dedicated store for online grocery orders with home delivery to serve Montreal next summer.

It's also increasing the number of Metro stores that offer a click-and-collect service — or buy online pickup in store — from the 40 planned to more than 100 by next fall.  

The announcement came as the retailer said its fourth-quarter profit rose by more than 10 per cent compared with a year ago, with its online grocery sales growing 160 per cent.

"We are now accelerating our investments in e-commerce to add capacity as demand grows," Metro president and CEO Eric La Fleche told analysts during a conference call.

He added that the company's strong performance "was fuelled in part by sales growth caused by the pandemic."

La Fleche said Metro expects food revenues will continue to grow at higher than normal rates over the short term, as a portion of restaurant and food service sales continue to transfer to grocery stores.

He said shoppers are increasingly reaching for prepared and made-to-order food, or what's referred to in the grocery sector as home meal replacement.

"Customers are looking for it," La Fleche said. "We're offering more and more prepared foods from our stores."

The trend is building on the “grocerant” concept — grocery stores selling prepared meals similar to a restaurant — that began before the pandemic and is expected to continue growing in the future. 

While it generally favours conventional full-service grocery stores, La Fleche said discount supermarkets remain strong.

"The discount stores are a significant part of our business," he said. "The search for value is not going away. We like our mix of discount and conventional."

Metro operates a network of roughly 950 food stores under several banners including the full-service supermarkets Metro and Metro Plus and the discount stores Super C in Quebec and Food Basics in Ontario.

La Fleche said in-store traffic improved during the quarter, but remained down significantly year-over-year. 

But he said the "larger basket" size — an increase in the amount of groceries people buy — more than offset the decrease in traffic. 

Revenue for the 12-week period that ended Sept. 26 totalled $4.14 billion, up from nearly $3.86 billion, with food same-store sales gaining 10 per cent.

Meanwhile, Metro also has about 650 drugstores primarily under the Jean Coutu, Brunet, Metro Pharmacy and Drug Basics banners.

Pharmacy same-store sales rose 5.5 per cent in the quarter, with a 5.3 per cent increase in prescription drugs and a six per cent increase in front-store sales.

Earlier this week, Amazon launched an online pharmacy to deliver prescription drugs in the U.S.

La Fleche said Metro does not see the announcement as a threat to the company's Canadian pharmacy division, given the stringent regulation of prescription medications here. 

Still, he said the retailer is improving its online pharmacy platforms to allow for electronic prescription renewals, orders and delivery as well as health file updates. 

As for more recent pharmacy sales, La Fleche noted that so far it appears to be a "much weaker cold and flu season" this year, with the increase in sanitary measures due to COVID-19 appear to help curb the spread of seasonal viruses. 

The company earned $186.5 million or 74 cents per diluted share for the quarter, compared with a profit of $167.4 million or 66 cents per diluted share in the same quarter last year.

For its full financial year, Metro said sales grew more than seven per cent, with net earnings up 11.5 per cent to $796 million.

On an adjusted basis, Metro says it earned $193.1 million or 77 cents per share for the quarter, up from an adjusted profit of $174 million or 68 cents per share a year ago.

- By Brett Bundale in Halifax. 

This report by The Canadian Press was first published Nov. 18, 2020.

Companies in this story: (TSX:MRU)

The Canadian Press

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