April 18, 2012 / 12:22 PM / in 5 years

Ethnic-food unit boosts Metro Inc profit

(Reuters) - Canada's third-largest grocery store operator, Metro Inc (MRU.TO), reported a higher quarterly profit on Wednesday as its majority-owned ethnic food retailer Marché Adonis boosted sales and margins.

Fiscal second-quarter gross profit margin rose to 18.8 percent from 18.4 percent a year earlier, thanks largely to the Adonis stores, in which Metro bought a 55 percent stake in October.

Sales rose 4 percent to C$2.65 billion ($2.68 billion). Sales at established stores, a key measure for retailers, rose 1 percent as customers spent more, on average, during each visit. Traffic in Metro's stores fell slightly, Chief Executive Eric La Fleche said on a conference call.

Asked about U.S. discount giant Wal-Mart Stores Inc's (WMT.N) growing presence in Quebec, La Fleche said the effect on sales at Metro stores has been manageable.

"I would say the impact continues to be modest, rather modest," he said. "We are not taking anything for granted or anything lightly, and I think our stores are in good shape. Our programs are in good shape, and we can face the competition."

Wal-Mart's rapid expansion in Canada, especially store conversions that have put groceries in more locations, has ramped up competition in food retailing.

Marché Adonis and Marché Adonis' distributor, Phoenicia, contributed C$59.0 million to Metro's quarterly sales, the company said.

La Fleche said the company hopes to open a new Adonis store this fall, and expand the Quebec-based banner into Ontario in 2013.

Net earnings for the second quarter, ended March 10, rose to C$96.1 million, or 94 Canadian cents a share, from C$85.7 million, or 82 Canadian cents, a year earlier. Analysts, on average, had expected 92 Canadian cents a share, according to Thomson Reuters I/B/E/S.

Also on Wednesday, Canadian convenience store operator Alimentation Couche-Tard said it had struck a $2.8 billion deal to enter Europe by acquiring Norway's Statoil Fuel and Retail ASA SFRET.OL.

Metro owns about 4.6 percent of Couche-Tard, according to Thomson Reuters data. Earnings from the investment rose to C$8.9 million in the second quarter from C$7.9 million a year earlier.

Shares of Montreal-based Metro were down 0.6 percent to C$53.30 in afternoon trading on the Toronto Stock Exchange.

($1=$0.99 Canadian)

Reporting by Maneesha Tiwari in Bangalore and Allison Martell in Toronto; editing by John Wallace

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