UPDATE 1-Canada's Metro profits rise, warns of "challenging" market
* Q1 EPS C$1.23 vs C$1.01 year earlier
* Sales rise 2.7 percent to C$2.70 billion
* Same-store sales up 1.5 percent
Jan 29 (Reuters) - Shares of Canada's Metro Inc slipped on Tuesday after the supermarket and drugstore chain warned of tough economic conditions and rising competition, despite reporting higher quarterly profits.
The chain, which is bracing for the opening of the first Target Corp stores north of the border this spring, posted higher earnings on rising sales and profit margins. It pointed out that the timing of its fiscal first quarter ended Dec. 22 flattered the results. Unlike the comparable quarter a year earlier, the latest period included most of the final week of the Christmas shopping season.
Shares of Metro, which operates more than 600 food stores and more than 250 drugstores in Canada, slipped more than 1 percent even though Metro announced a 16 percent increase in its quarterly dividend after the market closed on Tuesday.
In a statement accompanying the results, Chief Executive Eric La Fleche said the current economic environment was "challenging" and consumers were cautious.
Along with rivals such as Loblaw Cos Ltd, Metro is facing rising competition as Wal-Mart Stores Inc expands its grocery offerings in Canada. Target Corp, the No. 2 U.S. discounter, will also sell groceries when it begins opening its first 124 Canadian stores in March or April.
Metro's net earnings rose to C$121.4 million ($120.9 million), or C$1.23 a share, from C$103.7 million, or C$1.01, a year earlier. Sales rose 2.7 percent to C$2.70 billion. Continued...