UPDATE 1-Tough competition hits Canadian grocer Metro's profit

Wed Nov 13, 2013 8:34am EST
 
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* Adjusted profit C$1.19 vs est. C$1.22

* Same-store sales down 1.8 percent

Nov 13 (Reuters) - Metro Inc, Canada's No.3 grocer, posted a larger-than-expected 40 percent drop in quarterly profit as expanding U.S. retailers provided "intense competition" in its home market.

Metro Inc said its fourth-quarter sales were hurt by competition, especially in Ontario, where rival retailers have opened more stores.

Wal-Mart Stores Inc is expanding in Canada and Target Corp, which entered the Canadian market this year, has said the country will be key to its growth over the next five years.

Target plans to have 124 Canadian stores by the end of the year.

To cope with increased competition, Metro is reorganizing its Ontario store network and plans to invest nearly C$250 million ($238.25 million) there in 2014.

The company, which runs Adonis ethnic food stores and the Brunet pharmacy chain, said in August that it would close or convert 15 of its stores in Ontario to cut costs.

The company is converting about half a dozen Metro stores into Food Basics discount outlets.   Continued...