Proactive Investors - Loblaw (TSX:TSX:L) and Metro Inc . (TSX:TSX:MRU) have delivered higher quarterly sales and earnings as the Canadian retailers' discount brands attracted more price-conscious consumers to their stores — even as food inflation started to ease.
Both retailers also benefited from higher footfall in their pharmacies.
Brampton, Ontario-based Loblaw (TSX:L) reported a 5% increase in revenue to C$18.27 billion for the quarter ended October 7, 2203, a touch higher than analysts’ consensus of C$18.26 billion.
Adjusted earnings per share (EPS) rose 12% to C$2.26, above the C$2.22 expected by analysts.
"Our stores are delivering more value, including deeper discounts on essentials, and customers are responding positively," Loblaw (TSX:L) chairman said Galen Weston commented in a statement.
"We remain focused on doing what we can to fight inflation and deliver lower prices for Canadians, while continuing to invest for the future."
Loblaw said it expects its retail business to grow earnings faster than sales for FY23, with adjusted EPS likely to grow in the low double digits.
Meanwhile, Montreal-based Metro reported a 14% rise in fourth-quarter sales to C$5.07 billion. Excluding an extra 13th week, sales were up 5.4%.
Adjusted fully diluted earnings per share for the three rose 7.6% to $0.99. The grocer said a five-week strike at 27 of its stores in the Greater Toronto Area shaved C$0.12 per share from earnings.
“Our sales momentum remains strong, driven by our discount banners and pharmacy,” Metro CEO Eric La Flèche declared in a statement.
“Food inflation declined steadily during the quarter and our teams continue to deliver the best value possible to our customers every day.”
Metro cautioned on “significant headwinds” in fiscal 2024 as it incurs some temporary duplication of costs and learning curve inefficiencies, as well as higher depreciation and lower capitalized interest.
It has guided investors to expect flat adjusted EPS for 2024, with profit returning to its annual growth target of between 8% and 10% over the medium and long term.
Metro’s shares were down 7.1% at C$70.17 in afternoon trade in Toronto. Loblaw’s shares fell 2% to C$120.59.