MONTRÉAL, Nov. 15,
2023 /CNW/ - METRO INC. (TSX: MRU) today announced
its results for the fourth quarter of Fiscal 2023 ended
September 30, 2023.
2023 FOURTH QUARTER HIGHLIGHTS
- 13-week quarter versus 12 weeks in 2022
- Sales of $5,071.7
million, up $14.4%
- Food same-store sales(1) up 6.8%
- Pharmacy same-store sales(1) up
5.5%
- Net earnings of $222.2
million, up 31.7%, and adjusted net earnings(1)
of $228.8 million, up 4.3%
- Fully diluted net earnings per share of $0.96, up 37.1%, and adjusted fully diluted net
earnings per share(1) of $0.99, up 7.6%
- Negative impact of about $0.12 per share due to a labour conflict at 27
Metro stores in the Greater Toronto
Area
2023 FISCAL HIGHLIGHTS
- 53-week fiscal year versus 52 weeks in 2022
- Sales of $20,724.6
million, up 9.7%
- Net earnings of $1,018.8
million, up 19.9%, and adjusted net earnings(1)
of $1,006.6 million, up 9.2%
- Fully diluted net earnings per share of $4.35, up 23.9%, and adjusted fully diluted net
earnings per share(1) of $4.30, up 12.6%
|
Fiscal
years
|
|
|
2023
|
%
|
|
2022
|
%
|
Change (%)
|
(Millions of
dollars, except for net earnings per share)
|
(13
weeks)
|
|
(12
weeks)
|
|
Sales
|
5,071.7
|
100.0
|
|
4,432.6
|
100.0
|
14.4
|
Operating income before
depreciation and amortization and impairments of assets, net of
reversals
|
448.0
|
8.8
|
|
441.4
|
10.0
|
1.5
|
Net earnings
|
222.2
|
4.4
|
|
168.7
|
3.8
|
31.7
|
Fully diluted net
earnings per share
|
0.96
|
—
|
|
0.70
|
—
|
37.1
|
Adjusted net
earnings(1)
|
228.8
|
4.5
|
|
219.4
|
4.9
|
4.3
|
Adjusted fully diluted
net earnings per share(1)
|
0.99
|
—
|
|
0.92
|
—
|
7.6
|
|
|
|
|
|
|
|
|
Fiscal
years
|
|
|
2023
|
%
|
|
2022
|
%
|
Change (%)
|
(Millions of
dollars, except for net earnings per share)
|
(53
weeks)
|
|
(52
weeks)
|
|
Sales
|
20,724.6
|
100.0
|
|
18,888.9
|
100.0
|
9.7
|
Operating income before
depreciation and amortization and impairments of assets, net of
reversals
|
1,969.6
|
9.5
|
|
1,844.6
|
9.8
|
6.8
|
Net earnings
|
1,018.8
|
4.9
|
|
849.5
|
4.5
|
19.9
|
Fully diluted net
earnings per share
|
4.35
|
—
|
|
3.51
|
—
|
23.9
|
Adjusted net
earnings(1)
|
1,006.6
|
4.9
|
|
922.1
|
4.9
|
9.2
|
Adjusted fully diluted
net earnings per share(1)
|
4.30
|
—
|
|
3.82
|
—
|
12.6
|
PRESIDENT'S MESSAGE
"We are pleased with our fourth quarter results which were
achieved in a challenging operating environment that included a
5-week strike at 27 Metro stores in Ontario. For the first time in our history,
sales for the year exceeded $20
billion and net earnings reached $1
billion. Our sales momentum remains strong, driven by our
discount banners and pharmacy. Food inflation declined steadily
during the quarter and our teams continue to deliver the best value
possible to our customers every day. We reached a key milestone in
our supply chain modernization program with the start-up of our new
state-of-the-art automated distribution center for fresh and frozen
products north of Montreal. This
facility will improve service to our stores and fuel our long-term
growth(2)", declared Eric La Flèche,
President and Chief Executive Officer.
OPERATING RESULTS
SALES
Sales in the fourth quarter of Fiscal 2023 remained strong,
reaching $5,071.7 million, and
up 14.4 % versus the fourth quarter of the prior year. Excluding
the 13th week in 2023, fourth quarter sales were up
5.4%. Food same-store sales(1) were up 6.8% (8.0% in the
fourth quarter of 2022) driven mostly by our discount banners.
Online food sales(1) were up 116.0% versus last year
(33.0% in the fourth quarter of 2022), mostly driven by higher
partnership sales. Our food basket inflation was about 5.5%, lower
than reported CPI and down from 8.0% in the third quarter. Pharmacy
same-store sales(1) were up 5.5% (7.4% in the
fourth quarter of 2022), with a 6.7% increase in prescription
drugs(1) and a 3.1% increase in front-store
sales(1), with increases across most categories except
over-the-counter products as we cycled very high sales last year
due to a strong cough and cold season.
Sales for Fiscal 2023 totalled $20,724.6
million, up 9.7% compared to $18,888.9 million for Fiscal 2022. Excluding the
53rd week in 2023, sales were up 7.6%.
OPERATING INCOME BEFORE DEPRECIATION AND AMORTIZATION AND
IMPAIRMENTS OF ASSETS, NET OF REVERSALS
This earnings measurement excludes financial costs, taxes,
depreciation and amortization and impairments of assets, net of
reversals.
Operating income before depreciation and amortization and
impairments of assets, net of reversals for the fourth quarter of
Fiscal 2023 totalled $448.0 million, or 8.8% of sales, an
increase of 1.5% versus the corresponding quarter of Fiscal 2022.
The fourth quarter of 2023 was unfavorably impacted by $36.7 million of estimated lost profits and
direct costs from a labour conflict at 27 Metro stores in the
Greater Toronto Area. For Fiscal
2023 operating income before depreciation and amortization and
impairments of assets, net of reversals totalled $1,969.6 million or 9.5% of sales, up 6.8% versus
the corresponding period of 2022.
Gross profit for the fourth quarter of 2023 was unfavorably
impacted by $36.3 million of
estimated lost profits and direct costs related to a labour
conflict at 27 Metro stores in the Greater Toronto Area. Gross
margin(1) for the fourth quarter and Fiscal 2023 were
19.5% and 19.7% respectively, versus 20.4% and 20.0% for the
corresponding periods of 2022, reflecting the impact of lost sales
related to the strike and a decline in our food margin partly
offset by an increase in our pharma division.
Operating expenses as a percentage of sales for the fourth
quarter and Fiscal 2023 were 10.7% and 10.2% versus 10.7% and 10.4%
in the corresponding periods of 2022. The net impact of a labour
conflict at 27 Metro stores in the Greater Toronto Area on operating expenses in
the fourth quarter of 2023 was an increase of $0.4 million. If not for lost sales due to the
strike, operating expenses as a percentage of sales would have been
lower than last year.
DEPRECIATION AND AMORTIZATION
Total depreciation and amortization expense for the fourth
quarter and Fiscal 2023 was $125.0
million and $525.2 million
versus $119.8 million and
$503.3 million for the
corresponding periods of 2022.
IMPAIRMENTS OF ASSETS, NET OF REVERSALS
There were no impairments of assets, net of reversals in Fiscal
2023. During the fourth quarter of Fiscal 2022, the Corporation
recorded $70.1 million of impairments
of assets, net of reversals, including $60.0
million(1) resulting from our decision to have
Jean Coutu withdraw from the Air Miles® loyalty program in the
spring of 2023. This impairment represents the entire carrying
value of the Jean Coutu loyalty program asset. Impairment losses
were also recorded on store assets, mainly right-of-use assets,
whose recoverable amounts were lower than their carrying amounts.
Impairment reversals were recognized during the fourth quarter of
2022 for other sites, following changes in the estimates used to
determine the recoverable amount.
NET FINANCIAL COSTS
Net financial costs for the fourth quarter of Fiscal 2023 were
$30.1 million compared with
$25.3 million for the
corresponding quarter of 2022. The increase is mostly due to higher
debt partly mitigated by higher capitalized interests on our
distribution center automation projects. For Fiscal 2023, net
financial costs were $122.6 million
compared with $117.6 million for
Fiscal 2022.
INCOME TAXES
The income tax expense of $70.7 million for the fourth quarter of
Fiscal 2023 represented an effective tax rate of 24.1% compared
with an income tax expense of $57.5 million and an effective tax rate of
25.4% in the fourth quarter of Fiscal 2022. The income tax expense
of $303.0 million for Fiscal 2023 and
$304.1 million for Fiscal 2022
represented an effective tax rate of 22.9% and of 26.4%
respectively. The decrease in the effective tax rate in 2023 is
mainly attributable to the recording of tax assets of $40.7 million in the third quarter of Fiscal
2023, for capital losses previously refused by the Canada Revenue
Agency.
NET EARNINGS AND ADJUSTED NET EARNINGS(1)
Net earnings for the fourth quarter of Fiscal 2023 were
$222.2 million compared with
$168.7 million for the
corresponding quarter of 2022, while fully diluted net earnings per
share were $0.96 compared with
$0.70 in 2022, up 31.7% and 37.1%
respectively. Excluding the specific items shown in the table
below, adjusted net earnings(1) for the fourth quarter
of Fiscal 2023 totalled $228.8 million compared with $219.4 million for the corresponding quarter
of 2022 and adjusted fully diluted net earnings per
share(1) were $0.99 versus
$0.92, up 4.3% and 7.6% respectively.
The labour conflict at 27 Metro stores in the Greater Toronto Area had an unfavorable impact
of approximately $27.0 million
after-tax or $0.12 per share. The
13th week had a favorable impact of $27.0 million net of tax or $0.12 per share.
Net earnings for Fiscal 2023 were $1,018.8 million compared with $849.5 million for Fiscal 2022, while fully
diluted net earnings per share were $4.35 compared with $3.51 in 2022, up 19.9% and 23.9%, respectively.
Excluding the specific items shown in the table below, adjusted net
earnings(1) for Fiscal 2023 totalled $1,006.6 million compared with $922.1 million for Fiscal 2022, and adjusted
fully diluted net earnings per share(1) amounted to
$4.30 versus $3.82, up 9.2% and 12.6%, respectively.
Net earnings and fully diluted net earnings per share (EPS)
adjustments(1)
|
2023
|
|
2022
|
|
Change (%)
|
|
(13
weeks)
|
|
(12
weeks)
|
|
|
|
|
Net earnings
(Millions of
dollars)
|
Fully diluted
EPS (Dollars)
|
|
Net earnings
(Millions of
dollars)
|
Fully diluted
EPS (Dollars)
|
|
Net earnings
|
Fully
diluted
EPS
|
Per financial
statements
|
222.2
|
0.96
|
|
168.7
|
0.70
|
|
31.7
|
37.1
|
Loss on impairment of a
loyalty program, net
of taxes of $15.9
|
—
|
|
|
44.1
|
|
|
|
|
Amortization of
intangible assets acquired in
connection with the Jean Coutu Group
acquisition, net of taxes of $2.4
|
6.6
|
|
|
6.6
|
|
|
|
|
Adjusted
measures(1)
|
228.8
|
0.99
|
|
219.4
|
0.92
|
|
4.3
|
7.6
|
|
|
|
|
|
|
2023
|
|
2022
|
|
Change (%)
|
|
(53
weeks)
|
|
(52
weeks)
|
|
|
|
Net earnings
(Millions of
dollars)
|
Fully diluted
EPS (Dollars)
|
|
Net earnings
(Millions of
dollars)
|
Fully diluted
EPS (Dollars)
|
|
Net earnings
|
Fully
diluted
EPS
|
Per financial
statements
|
1,018.8
|
4.35
|
|
849.5
|
3.51
|
|
19.9
|
23.9
|
Loss on impairment of a
loyalty program, net
of taxes of $15.9
|
—
|
|
|
44.1
|
|
|
|
|
Amortization of
intangible assets acquired in
connection with the Jean Coutu Group
acquisition, net of taxes of $10.2
|
28.5
|
|
|
28.5
|
|
|
|
|
Favorable tax
adjustment in respect of prior
years
|
(40.7)
|
|
|
—
|
|
|
|
|
Adjusted
measures(1)
|
1,006.6
|
4.30
|
|
922.1
|
3.82
|
|
9.2
|
12.6
|
NORMAL COURSE ISSUER BID PROGRAM
Under the current normal course issuer bid program, the
Corporation may repurchase up to 7,000,000 of its Common
Shares between November 25, 2022 and November 24,
2023. Between November 25, 2022 and
November 7, 2023, the Corporation has repurchased 6,719,700
Common Shares at an average price of $72.09, for a total consideration of $484.4 million. The Corporation
intends(2) to renew its normal course issuer bid program
as an additional option for using excess funds.
DIVIDENDS
On October 6, 2023, the Board of
Directors declared a quarterly dividend of $0.3025 per share, the same amount declared last
quarter.
FORWARD-LOOKING INFORMATION
We have used, throughout this report, different statements that
could, within the context of regulations issued by the Canadian
Securities Administrators, be construed as being forward-looking
information. In general, any statement contained herein that does
not constitute a historical fact may be deemed a forward-looking
statement. Expressions such as "intend", "expect" and other
similar expressions are generally indicative of forward-looking
statements. The forward-looking statements contained herein are
based upon certain assumptions regarding the Canadian food and
pharmaceutical industries, the general economy, our annual budget,
as well as our 2024 action plan.
These forward-looking statements do not provide any guarantees
as to the future performance of the Corporation and are subject to
potential risks, known and unknown, as well as uncertainties that
could cause the outcome to differ significantly. Risk factors that
could cause actual results or events to differ materially from our
expectations as expressed in, or implied by, our forward-looking
statements are described and discussed under the "Risk Management"
section in our Annual Report 2022.
We believe these statements to be reasonable and pertinent as at
the date of publication of this report and represent our
expectations. The Corporation does not intend to update any
forward-looking statement contained herein, except as required by
applicable law.
NON-GAAP AND OTHER FINANCIAL MEASUREMENTS
In addition to the International Financial Reporting Standards
(IFRS) measurements provided, we have included certain non-GAAP and
other financial measurements. These measurements are presented for
information purposes only. They do not have a standardized meaning
prescribed by IFRS and therefore may not be comparable to similar
measurements presented by other public companies.
National Instrument 52-112 Non-GAAP and Other Financial Measures
Disclosure sets out specific disclosure requirements for non-GAAP
financial measures, non-GAAP ratios, and other financial measures,
which are capital management measures, supplementary financial
measures, and total of segments measures, as defined in the
Instrument (together the "specified financial measures").
The specified financial measures we disclose in our documents
made available to the public are presented by measurement
categories below.
NON-GAAP FINANCIAL MEASURES
Adjusted net earnings is a non-GAAP financial measurement
that with respect to its composition is adjusted to exclude an
amount that is included in, or include an amount that is excluded
from, the composition of the most directly comparable financial
measure disclosed in our consolidated financial statements.
For measurements depicting financial performance, we believe
that presenting earnings adjusted for these items, which are not
necessarily reflective of the Corporation's performance, leaves
readers of financial statements better informed thus enabling them
to better perform trend analysis, evaluate the Corporation's
financial performance and assess its future outlook. Adjusting for
these items does not imply that they are non-recurring.
NON-GAAP RATIOS
Adjusted fully diluted net earnings per share is a
non-GAAP ratio by where a non-GAAP financial measure is used as one
or more of its components.
We believe that presenting this ratio, in which a non-GAAP
financial measurement is used as one or more of its components,
leaves readers of financial statements better informed as to the
current period and corresponding prior year's period's performance,
thus enabling them to better perform trend analysis, evaluate the
Corporation's financial performance and assess its future outlook.
Adjusting for these items does not imply that they are
non-recurring.
SUPPLEMENTARY FINANCIAL MEASURES
The supplementary financial measures listed below are, or are
intended to be, disclosed on a periodic basis to depict the
historical or expected future financial performance, financial
position or cash flow of the Corporation.
Food same-store sales and pharmacy same-store sales
(including total, front-store and prescription drugs) are
defined as comparable retail sales of stores with more than 52
consecutive weeks of operations, including relocated, expanded and
renovated locations.
Online food sales are the sum of sales made from all
our online channels.
Gross margin ratio is calculated by dividing gross
profit by sales.
OUTLOOK(2)
As we begin our new fiscal year, we are ramping up our new
state-of-the-art, automated distribution center north of
Montreal and the expansion of our
Montreal produce facility as
planned. We are also preparing for the launch of the final phase of
our automated fresh facility in Toronto next spring. While these investments
position us well for continued long-term profitable growth, we are
facing significant headwinds in Fiscal 2024 as we incur some
temporary duplication of costs and learning curve inefficiencies,
as well as higher depreciation and lower capitalized interest. We
will not fully absorb these additional expenses and we are
currently forecasting operating income before depreciation and
amortization and impairments of assets, net of reversals to grow by
less than 2% in Fiscal 2024 versus the level reported in Fiscal
2023, and adjusted net earnings per share to be flat to down
$0.10 in Fiscal 2024 versus the level
reported in Fiscal 2023. We expect to resume our profit growth post
Fiscal 2024 and are maintaining our publicly disclosed annual
growth target of between 8% and 10% for net earnings per share over
the medium and long term.
CONFERENCE CALL
Financial analysts and institutional investors are invited to
participate in a conference call for the 2023 fourth
quarter results at 9:00 a.m.
(EST) today, November 15,
2023. To access the conference call, please dial (416)
764-8651 or 1 (888) 390-0620. The media and investing public may
access this conference via a listen mode only.
Notice to readers: METRO
INC. fourth quarter of 2023 interim condensed consolidated
financial statements and management's discussion and analysis are
available on the Internet at www.corpo.metro.ca - Corporate
Site - Investors - 2023 Quarterly Results - 2023 Fourth
Quarter Results.
(1)
|
See table in section
"Operating Results" and section on "Non-GAAP and Other Financial
Measurements"
|
(2)
|
See section on
"Forward-looking Information"
|
SOURCE METRO INC.