Metro (MRU) Q3 2024 earnings summary

Executive summary

• Total sales reached CAD 6.65 billion, up 3.5% year-over-year, with food same-store sales up 2.4% and pharmacy up 5.2%.

• Gross margin was stable at 19.6% of sales, and EBITDA rose 1.6% year-over-year (adjusted for asset sales).

• Adjusted net earnings were CAD 305 million, down 3.1% from last year, with adjusted EPS flat at CAD 1.35.

• Net earnings for the quarter were CAD 296.2 million, down 14.6% year-over-year, and fully diluted EPS was CAD 1.31, down 12.1%.

• Online sales grew 35% year-over-year, supported by expanded click-and-collect and third-party delivery partnerships.

Financial highlights

• Operating expenses rose 4.8% to CAD 681.7 million, mainly due to new automated distribution center startup costs and higher e-commerce fees.

• Depreciation and amortization increased by CAD 14.5 million, reflecting investments in new DCs.

• Net financial costs increased to CAD 46.6 million, up from CAD 37.1 million, due to higher debt and interest rates.

• Operating income before depreciation, amortization, and impairments was CAD 620.2 million (9.3% of sales), up 1.3% year-over-year.

• Share repurchases totaled 6.045 million shares for CAD 430 million under the current buyback program.

Outlook and guidance

• Results are tracking well to fiscal 2024 guidance, with expectations to return to usual profit growth targets in fiscal 2025 as DC ramp-up costs subside.

• Adjusted net earnings per share forecasted to be flat to down CAD 0.10 for Fiscal 2024 versus Fiscal 2023.

• Medium- and long-term annual net earnings per share growth target maintained at 8% to 10%.

• No significant lingering costs expected from DC automation projects into next year; focus will shift to efficiency gains.

• CapEx for 2024 expected to be around CAD 650 million, with a normalized run rate of CAD 550–600 million in future years.