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Apr 21, 2021

Metro pushes ahead with tech upgrades despite pandemic

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MONTREAL -- Metro Inc. is pressing ahead with technology upgrades despite the pandemic, with the food retailer planning to roll out more self-checkout machines, electronic shelf-labels and new automated distribution centres in the coming months.

President and CEO Eric La Fleche said the supply chain modernization and digital technology upgrades in-store, online and in its distribution facilities remain a key focus for the grocery and drugstore retailer.

"It's a multi-year plan and we're going to do it gradually in phases," he told analysts during a conference call Wednesday as Metro reported a bump in its second quarter profits and sales amid renewed lockdowns and curfews.

"It's some heavy lifting for sure. We're going to manage through it."

In February, Metro started ramping up operations in its new semi-automated produce distribution centre in Toronto, he said.

A new fully-automated distribution centre for frozen foods is in the final stage of construction and will be commissioned over the coming months with a planned opening in January 2022, La Fleche said.

"It is always challenging to start a new distribution centre -- even more so during a pandemic," he said. "But our team is doing a good job to manage the expected transition costs."

The Montreal-based company, which includes the Metro grocery store chain and Jean Coutu drugstores, is also planning to add more self-checkout kiosks this year.

Metro has about 260 stores with self-checkouts and is planning another 90 this fiscal year, chief financial officer Francois Thibault said.

The rollout is in both its conventional and discount banners, La Fleche added.

"It's a store-by-store analysis where we think it pays off and where it accelerates service for customers and reduces hours for us," he said.

Metro is also adding electronic shelf labels to some stores, focusing primarily on the company's discount stores for now in a bid to make them more efficient, La Fleche said.

The retailer operates a network of supermarkets under several banners including the full-service grocery stores Metro and Metro Plus and the discount stores Super C in Quebec and Food Basics in Ontario.

Meanwhile, the company recorded a five per cent uptick in sales and a profit of $188.1 million, up from $176.2 million a year ago, for the quarter ended March 13.

"We had very solid results in the second quarter ... in what can only be described as a challenging operating environment," La Fleche said. "Our teams continue to demonstrate great dedication and resilience to serve our communities. I'm grateful for their hard work."

Metro paid out $8 million of gift cards to front-line employees in the quarter, and recently announced it would be offering front-line workers another round in May ranging from $75 to $300.

Online grocery sales grew by 240 per cent in the quarter compared to the same quarter last year, and volumes in Metro's so-called hub stores remained strong.

Overall, food same-store sales were up 5.5 per cent while pharmacy same-store sales were down 0.8 per cent, Metro said.

Restrictions on the sale of non-essential goods in Quebec combined with a much milder cold and flu season negatively impacted pharmacy sales in the second quarter, even though core prescription sales remained solid, La Fleche said.

Metro has about 650 drugstores primarily under the Jean Coutu, Brunet, Metro Pharmacy and Drug Basics banners.