* Sales C$3.6 billion vs C$3.5 billion (Adds conference call, details, shares)
TORONTO, Aug 11 (Reuters) - Metro Inc MRUa.TO quarterly earnings climbed 6.6 percent, helped by improved operations and higher revenue, even as same-store sales slipped and food price deflation persisted, Canada’s No. 3 grocer said on Wednesday.
Metro, which operates over 600 supermarkets in Ontario and Quebec, said in a conference call with analysts that food deflation was close to 2 percent and continued to pressure margins, particularly in the meat and fruit categories.
“We see this trend continuing, at least until the fall. And it would be imprudent to make any predictions beyond that,” Chief Executive Eric La Fleche told analysts.
The cautious outlook weighed on the stock, which was down a little over 1 percent.
Grocers generally benefit from rising food prices as they pass on higher costs for commodities like wheat, rice and fresh produce to consumers. Food deflation typically leads to competitive price-cutting and tighter profit margins.
Earnings rose to C$120 million ($115.5 million), or C$1.12 a share, in the third quarter, ended July 3, from C$112.6 million, or C$1.01, a year earlier.
The average analyst estimate was for a profit of C$1.12 a share, according to Thomson Reuters I/B/E/S.
Overall sales rose 1.4 percent to C$3.6 billion, while sales at stores open for at least a year, fell 0.6 percent.
A year ago, Metro benefited from high food price inflation and the temporary closing of several competitor stores due to a labor conflict.
EBITDA rose 6.3 percent at C$247.7 million, helped by an increase in gross margins driven by improved operations.
Despite the cautious outlook, Metro said it was maintaining its earnings per share growth target of 8 to 10 percent for next year.
Metro shares fell 51 Canadian cents, or 1.2 percent, at C$43.30 on the Toronto Stock Exchange late afternoon.
$1=$1.04 Canadian Reporting by Solarina Ho; editing by Rob Wilson