Revenue and Adjusted Earnings per Share
- Metro is set to report its first-quarter earnings on Jan. 30.
- Analysts anticipate revenue to increase to 4.91 billion Canadian dollars ($3.64 billion), up from C$4.67 billion last year.
- The projected adjusted earnings per share is C$0.99.
Factors to Monitor
Costs and Expenses
- Metro is currently facing a range of expenses, particularly in labor inflation, higher fees related to its ecommerce partnership, and costs associated with its expanded loyalty program.
- TD Cowen analyst Michael Van Aelst predicts a challenging quarter due to elevated operating expense growth.
Impact of Food Inflation
- Persistent high inflation in Canada raises curiosity about consumer behavior regarding value-seeking during daily and weekly grocery shopping.
- Van Aelst expects a decline in basket inflation from 5.5% in the fourth quarter to 3.5%.
- Customers are increasingly gravitating towards discount options, where Metro has a strong presence, greater private-label products, and promotional activities returning to pre-pandemic levels.
Sales Performance
- The first quarter encompasses the crucial period leading up to the Christmas holiday, making it important to evaluate its impact on sales.
- Van Aelst estimates a 220 basis-point timing benefit on same-store sales due to the shift of Christmas shopping into the first quarter.
- He believes this timing benefit will contribute an additional C$0.05 to EPS.