Metro Inc 2013 fiscal results (quarterly sales, same-store, earnings, competition)

notes - I) Metro Inc to convert all of its Ontario stores to the Food Basics discount banner  II) Will operate all Target in-store pharmacies in Quebec.      Metro fiscal year     2013 key metrics      third quarter      40-weeks     

4Q2013 and Fiscal Year Ended September 28, 2013

Fiscal year revenue : increased competition and higher promotional sales resulted in some deflation in the company's food basket.  This was most pronounced in the fourth quarter when adjusted sales declined by 1.1% (when adjusted for extra week in 4q2012).  For the year the company attributed the 0.4% decline in sales (adj for extra week) to i) unusually low inflation in food ii) more competition iii) closure of underperforming stores iv) problems at pharmaceutical warehouse.
same store sales down -1.8% vs +1.1% in the same quarter of last year .. big reason for the decline is intense competition from Walmart faced by its Food Basics and Super C discount chains.  Food Basics represents 116 of its 559 supermarkets (33000 ft2), Super C 85 stores (40500 ft2).

EBITDA : 4Q:  down 29.7% -> $147.4m (vs $209.7m) Fiscal:  down 5.1% -> $781.2m (vs $822.9m).  No change in depreciation and ammortization for the quarter ($41.3m vs $41.8m) or year ($179.6m vs $183.9m).

Earnings Per Share basic (total including discontinued operations):  4Q:  down 40.1% -> 88c (vs 147c)  Fiscal:  down up 54.4% -> 752c (vs 487c).  

Comprehensive Income (net earnings + items such as changes in defined benefit plans and corresponding income taxes) :  4Q:  down 22.1% -> $101.6m (vs $130.4m)   Fiscal:  up 77.2% -> $778.6m (vs $439.5m).   Unlike last year 2013 comprehensive income was higher than net income (+$57.0m vs -$49.8m).  Uplifted by actuarial gains (+$86.0m vs -$65.6m last year), Negatively impacted by corresponding income taxes (-$20.8m vs +$19.0m last year).  full results here

Assets and Debt as of November 2013 '000000 $

 

 company  Loblaw Co  Empire Co  Metro Inc   Costco Couche Tard

assets

change

 20,460.0

  +17.9%

   8981.3

  +31.3%

  5061.5

  -1.7%

 30,283.0

  +11.6%

  10,672.2

     +3.1%

long term debt

change

    6871.0

  +22.8%

    870.3

   -4.30%

   650.0

 -33.3%

  4998.0

 +261.9%

    3371.9

    +18.5%

 

3Q2013 - 16 wks ended July 6, 2013

Canada's 3rd largest grocer by sales/ 2nd largest by market valuation profited $149.8m (+3.7%) or $1.55/sh (+8.3%) on retail sales of $3,573.3m (-0.74%).  The decline in revenue is attributable to a change in the date of a holiday / closure of unprofitable locations - also i) low inflation ii) higher competition. investor note : though revenue declined marginally the bottom lines improved - ebitda +3.0% -> $265.6m; ebit +3.0% -> $208.0m; net earnings loss due to discontinued operations was lower q2q (-0.4m -> -0.1m) however taken over the last 3 quarters it was up significantly (-0.5m -> +6.2m);  Asset sales included $479.8m divestment of half of Metro's 10% stake in

 Couche-Tard. Income tax @ $58.1m (+3.4% vs $56.2m) at an effective rate of 27.9% (down from 28.0%).

Balance Sheet :  long term debt : total capital = 18.7% down from 27.7% at end of last fiscal year (sept 2012) : lt debt = $973.9m -> $655.9m (-33%). net earnings : lower qoq ($366m -> $88m) due to an artificial boost in the previous qtr (asset sales accounted for $307.8m in additional profit for the 40 week period). the 3q included a $50.0m actuarial gain (was $(15.6)m loss previously) which helped to boost comprehensive income to $174.5m (vs $134.4m).  dividend payments from couche-tard accounted for $0.8m in profit this quarter down from $1.6m last year (half of its interest was sold in 2q2013 for $479.5m). adjusted net earnings +1.4% -> $149.9m or $1.55 a share (+6.2%).

the company made $23.8m in dividend payments up from $21.1m.

Quarterly dividend per share changes : fiscal 2013 - 25.0c every quarter;  fiscal 2012 - 21.5c every quarter;  fiscal 2011 - 19.25c every quarter, highest same-store sales growth in recent history was +3.2% for quarter ended Sept 2011 (4q2011).

 

40-week period ended July 6, 2013

cost of sales down $43.9m or -0.6%.   that helped ebitda (+3.4% -> $633.8m), operating income (+5.2% -> $495.5m) [ D&A down -2.7% -> 138.3m ].  Income tax up siginificantly +37.4% -> $174.8m (effective rate of 21.7% down from 27.0%) however because of a +$307.8m one-time gain on a portion of the investment in Couche-Tard, net earnings up 85.4% -> $638.0m (vs $344.7m).  per share earnings went from $3.40 -> $6.61 basic, $3.38 -> $6.56 diluted.  Total revenue $8791.2m (vs $8812.7m). the 3q included a $50.0m actuarial gain bringing the total actuarial gain for the 40-week period to +$71.5m, that counteracted a cumulatave -$32.5m loss in all other comprehensive income categories to bring comprehensive income up by 119% to $677.0m (vs $309.1m) [remember net earnings up 85.4% vs 119% for comprehensive income).  $71.3m in dividend payments ($68.6m excl non-controlling interests) up from $62.0m last year (per share that's 75.0c vs 64.5c)

Couche-Tard accounted for $3.2m in profit this quarter down from $4.7m last year. thanks to assets sales Metro Inc was able to pay down its debt by $348.3m vs $6.7m last year (40-weeks). grocery stocks, grocer prices in quebec.

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