Metro says labour shortages, inflation impacting Canada's grocery industry
MONTREAL - Mounting labour shortages and rocketing inflation are impacting Canada's grocery industry supply chain, from food retailers and suppliers to logistics providers, Metro Inc. said Tuesday.
"Our industry continues to experience cost inflationary pressures, particularly in cost of goods, and labour shortages which have increased with the latest strain of COVID,'' Metro said in its outlook along with its latest financial results.
"Labour shortages are also affecting our suppliers and logistics providers.''
Eric La Fleche, Metro's president and CEO, said the current wave of COVID-19 has created challenging conditions.
"The rapid spread of the Omicron variant since the end of the quarter has caused challenges in our operations,'' he said in a statement. "Our industry is facing higher than normal inflationary pressures.''
Despite climbing inflation and a strained supply chain, the Montreal-based grocery and drugstore retailer said its first-quarter profit and sales climbed compared with a year ago.
Metro said it earned $207.7 million or 85 cents per diluted shared for the 12-week period ended Dec. 18, up from a profit of $191.2 million or 76 cents per share in the same quarter a year earlier.
On an adjusted basis, Metro says it earned 88 cents per diluted share, up from an adjusted profit of 79 cents per diluted share a year ago.
Sales in the quarter totalled $4.32 billion, up from $4.28 billion in the same quarter last year. The increase came as food same-store sales fell 1.4% compared with a year ago, while pharmacy same-store sales rose 7.7 per cent.
Metro said it expects sales to remain stable in its second quarter, but cautioned that there continues to be uncertainty.
"Government measures to curb the impact of the pandemic were tightened at the start of the second quarter, similar to what transpired a year ago,'' the company said. "It remains difficult to predict how they will evolve and the impact they will have on our business.''
In the short term, however, food sales are expected to remain relatively stable as restaurant closures and work-from-home advisories persist, Metro said.
On the pharmacy side, the company said sales are expected to climbed compared with the prior year.
This is due to the launch of the COVID-19 rapid test distribution in its network, coupled with less restrictive government measures, the company said.
Metro said it was "unfavourably impacted'' last year by a six-week ban on the sale of non-essential goods in Quebec.
The company operates under several banners including grocers Metro, Metro Plus, Super C and Food Basics, and drugstores under the Jean Coutu, Brunet, Metro Pharmacy and Drug Basics banners. Its convenience operations include 339 Servi Express and Dépanneurs Gem Convenience Stores in Quebec.