MONTREAL - Supermarket retailer Metro Inc. plans to help its new partner Marche Adonis to accelerate its growth by opening about two more Mediterranean-style grocery stores a year in Quebec and Ontario.
"We hope to maybe go to 12-15 stores over the next five years or so in both provinces so we'll grow gradually and effectively," Metro CEO Eric La Fleche said Wednesday during a conference call to discuss its fourth-quarter and full-year results.
"They're highly successful. I don't know of any stores in Canada with higher sales per square foot than these four stores in the Montreal area."
Metro, which acquired a 55 per cent stake in Adonis and its distributor Phoenicia Products last month, has not revealed the purchase price, but said it was more than typical for Canadian grocery retailers.
Adonis and its distributor, Phoenicia Products, earned more than $200 million in annual sales from its four current locations, which will be added to Metro's results in the coming quarter.
La Fleche said the deal will also help to improve the ethnic offerings in its Metro, Super C and Food Basics stores.
In addition to a wide array of fresh vegetables and marinated and grilled meats, Adonis sells Lebanese-style dishes ranging from kibbeh to stuffed zucchini and Greek-style desserts like baklava.
Metro capped its financial year with strong increases in sales and core profits as overall prices increased despite deep promotional discounts.
The Montreal-based company said Wednesday it posted the strongest quarterly sales of the year as revenues increased by 3.8 per cent in the fourth quarter to $2.66 billion. Same-store sales, a key measure of progress for stores open at least a year, were up 3.2 per cent.
"In a market environment that was as competitive as the previous quarters and despite the lower generic drug pricing, our teams were up to the task and delivered our strongest sales and earnings growth of the year," La Fleche told analysts.
For the quarter, Metro reported a profit of $86.1 million or 84 cents per diluted share, down from $93.4 million or 88 cents per share a year ago.
The results included a $20.2-million charge in the quarter to close a meat-processing plant in Montreal and a grocery warehouse in Toronto.
Excluding one-time charges, the company said it earned $100.4 million or 98 cents per share, up four cents from the average analyst expectations according to a poll by Thomson Reuters.
Irene Nattel of RBC Capital Markets said Metro served up "a yummy end to the fiscal 2011 meal."
Modest inflation and a focus on operational efficiency enable the chain to hold its own despite lower drug prices and a competitive market environment, she wrote in a report.
"Results support the thesis that food price inflation flatters food retailer profitability trends, while food price deflation flattens them."
Meanwhile, Metro said the opening of four Walmart Supercentres in Quebec has had only "modest" impact on its nearby stores.
"We felt some impact but it's still less than expected, certainly less than we felt in Ontario," La Fleche added.
Metro (TSX:MRU.A) is Quebec's leading grocery chain with nearly 34 per cent market share. It has more than 65,000 employees in Quebec and Ontario.
The company operates a network of close to 600 food stores under several banners including Metro, Metro Plus, GP, Super C and Food Basics, as well as over 250 drugstores under the Brunet, Brunet Plus, Clini Plus, The Pharmacy and Drug Basics banners.
Metro is also a shareholder in Alimentation Couche-Tard (TSX:ATD.B), which generated $15.2 million in proceeds in the fourth quarter.
On the Toronto Stock Exchange, Metro's shares closed at $50.50, up $1 or two per cent, in Wednesday trading.