Weak loonie, trade war could drive food prices higher: Metro

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This article was published 28/01/2025 (615 days ago), so information in it may no longer be current.

Metro is in “wait and see” mode ahead of potential tariffs from new U.S. President Donald Trump, and is keeping an eye on the weakening loonie at a time of year when Canada relies most on its southern neighbour for fresh food, said chief executive Eric La Flèche.

“The dollar is the big worry,” La Flèche said at a press conference following the grocer’s annual general meeting. 

“There’s a consequence on our costs if the Canadian dollar weakens … we’re feeling that pressure.”

The company tries to buy Canadian and local as much as it can, he said, “but there are certain products, especially at this time of year, that we don’t produce in Canada and we don’t sell in Canada.”

The Canadian dollar has been steadily weakening for months amid the widening gap between interest rates in Canada and the U.S., and more recently, threats of sweeping tariffs from Trump and talk of retaliatory tariffs by Canada have compounded that pressure. 

The past year saw the continued normalization of food inflation, said La Flèche, but trade disruptions could threaten that. 

“I hope this trade war will not concern food,” he said. “It’s a very volatile situation, and we will just have to wait and see.” 

Potential trade war aside, La Flèche was optimistic about growth in the coming year for Metro as it exits what he calls a “transition year.”

Speaking at Metro’s annual general meeting Tuesday morning, La Flèche said Metro plans to reap the benefits of recent investments in its supply chain that wrapped up in 2024, and to continue pursuing customer loyalty after expanding its Moi rewards program last year into Ontario. 

“We’re in a good position to pursue growth and expansion of this retail network in the years to come,” he said in French. 

La Flèche said Metro plans to open 12 new stores in 2025, most of them being discount stores, which he said continue to see higher sales growth than conventional banners.

“However, we’re seeing the gap narrow as we cycle our strong discount performance over the past three years,” he told investors on a conference call discussing the results. 

“Discount had strong, strong growth for three years running. So at some point, the market settles … and you come back to more normal levels of growth.” 

The company raised its dividend Tuesday and reported a first-quarter profit of $259.5 million, up from a profit of $228.5 million in the same quarter last year. 

The grocery and drugstore retailer says it will now pay a quarterly dividend of 37 cents per share, up from 33.5 cents per share.

The increased payment to shareholders came as Metro reported a profit of $1.16 per diluted share for the 12-week period ended Dec. 21, up from 99 cents per diluted share a year earlier.

Sales in the quarter totalled $5.12 billion, up from $4.97 billion in the same quarter last year.

Food same-store sales were up one per cent compared with a year earlier and up 2.4 per cent after adjusting for a shift of two significant pre-Christmas shopping days to the second quarter.

Pharmacy same-store sales were up 5.1 per cent with a 7.3 per cent increase in prescription drugs. Front-store same-store sales were up 0.5 per cent compared with a year ago and up 1.9 per cent after adjusting for the Christmas shift.

On adjusted basis, Metro says it earned $1.10 per diluted share in its latest quarter compared with an adjusted profit of $1.02 per diluted share in the same quarter last year.

This report by The Canadian Press was first published Jan. 28, 2025.

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