Canadian retailer Metro Inc has reported an increase in annual profits but a fall in sales, citing, like rival Loblaw, fierce competition in the last three months.
Metro booked a 3.9% increase in adjusted net earnings from continuing operations of C$478.4m (US$455.7m) for the year to 28 September.
Reported net earnings were C$712.9m, up sharply from 2012/13, but boosted by a gain from the sale of its stake in Canadian c-store retailer Couche-Tard last January.
Metro provided a figure for adjusted EBITDA for the year, which was up 7.2% at C$821.2m.
However, its sales dipped 0.4% to C$11.4bn. The retailer pointed to “very low” food inflation, increased competition and the closure of under-performing stores as factors.
The fall in sales was steeper in the final quarter of the year. Sales dropped 1.1% as Metro upped promotions. Same-store sales were down 1.8%.
“Sales in fourth quarter of fiscal 2013 were impacted by intense competition, especially in Ontario, resulting from an increase in competitive square footage that exceeded market growth,” Metro president and CEO Eric La Flèche said.
However, La Flèche pointed to higher fourth-quarter net earnings, which rose 0.2%. He added: “We achieved net earnings and earnings per share growth in the quarter and for the year, due to good margin management, operating cost control, and our share repurchase programme.
“We have begun the reorganisation of our store network in Ontario and we will be investing nearly C$250m in our network in 2014. We are confident that these measures, coupled with efficient merchandising strategies, will allow us to continue to grow in the next fiscal year.”
Shares in Metro were down 5.65% at C$62 at the close of trading in Toronto yesterday (13 November).
Loblaw’s stock closed down over 7% after it issued a profit warning after it stepped up investment in response to rivals expanding in the country.