Metro Inc. (MTRAF), a prominent player in Canada’s grocery and pharmacy sectors, delivered a mixed performance in its fourth-quarter 2024 earnings report. Despite a 2.6% decline in total sales year-over-year, which brought in $4.94 billion, the company demonstrated strength in key growth areas, including pharmacy sales, online performance, and customer loyalty initiatives.
Key Achievements in Q4 2024
Comparable Sales Growth
- Food same-store sales increased by 2.2%, while pharmacy same-store sales grew by an impressive 5.7%.
- Overall comparable 12-week sales rose 5.7%, reflecting robust consumer demand despite a shorter fiscal year.
Strong Online Presence
- Online sales surged by 27% on a comparable 12-week basis, fuelled by third-party partnerships and expanded click-and-collect services.
Operational Efficiency
- Gross margin improved slightly to 19.7%, compared to 19.5% in the same period last year.
- EBITDA rose 2.6% year-over-year to $459.6 million, representing 9.2% of total sales.
- Operating expenses were reduced to 10.4% of sales, down from 10.7% in the prior year.
Strategic Investments and Customer Engagement
Metro completed its transformative $1 billion supply chain modernisation project, a seven-year initiative aimed at improving efficiency and capacity. This milestone positions the company for long-term growth and adaptability in an increasingly competitive retail landscape.
The launch of the Moi Rewards program in Ontario was another major success, with over 1 million customers enrolling within just four weeks. This rapid adoption underscores Metro’s ability to foster strong customer loyalty through targeted engagement strategies.
On the physical retail front, Metro opened nine new stores, including three Super C conversions, and completed major expansions and renovations at 11 locations, enhancing the in-store shopping experience.
Challenges in Q4 2024
Despite these achievements, Metro faced several challenges:
- Total Sales Decline: A 2.6% decrease compared to 2023, partially attributed to the prior 53-week fiscal year.
- Rising Financial Costs: Net financial expenses rose to $32.6 million, driven by higher debt levels and interest rates.
- Earnings Pressure: Adjusted net earnings dipped by 1% year-over-year to $226.5 million, reflecting tight margins in a competitive market.
- E-commerce Profitability: While online sales grew significantly, they remain less profitable than brick-and-mortar operations, impacting overall margins.
Looking Forward
Metro’s ability to balance strategic growth and operational efficiency positions it well for the future. Investments in supply chain infrastructure, online capabilities, and customer loyalty programs like Moi Rewards are expected to drive further growth.
As Metro continues to expand its footprint through new store openings and renovations, it remains focused on overcoming competitive pressures in both food and pharmacy sectors. With strong pharmacy sales growth and advancements in e-commerce, Metro aims to build on its resilience and strengthen its market position in the years to come.
