November 18, 2009 / 12:40 PM / 9 years ago

UPDATE 2-Grocer Metro Inc tops expectations

* EPS C$0.78 vs analyst forecast C$0.73

* Revenue up 2.3 percent at C$2.53 billion

* Same store sales rise 2 percent

* Shares rise 2.6 percent to C$37.03 (Adds company and analyst comments)

By Scott Anderson

TORONTO, Nov 18 (Reuters) - Metro Inc MRUa.TO said on Wednesday that a strong performance at its Ontario stores helped Canada’s No. 3 grocery chain deliver quarterly results that topped expectations.

The Montreal-based supermarket chain, which recently consolidated all of its Ontario stores, including Dominion, under the Metro banner, said it earned C$84.4 million ($80.7 million), or 77 Canadian cents a share in its fourth quarter. That was up 16.4 percent from C$72.5 million, or 65 Canadian cents a share, in the same period last year.

Adjusted earnings, which exclude nonrecurring costs from the rebranding, were C$85.9 million, or 78 Canadian cents a share.

Sales rose 2.3 percent to C$2.53 billion. Same store sales, which track the performance of stores open for more than a year, climbed 2 percent.

Analysts had expected an average of 73 Canadian cents a share before items and revenue of C$2.53 billion, according to Thomson Reuters I/B/E/S.

“Pretty decent numbers from Metro. Obviously the rebranding of Dominion has gone very well and the non-recurring costs from converting Dominion is going to tail off,” said Gavin Graham, director of investments at BMO Asset Management.

Metro’s shares were up 2.6 percent at C$37.03 on the Toronto Stock Exchange.

The strong performance came despite the advantage of retail food price inflation, which bolstered the results at the country’s top grocers earlier this year.

With that benefit all but gone, the grocers will have to find new ways to spur sales, including boosting volume with price cuts.

Metro President and Chief Executive Eric LaFleche said he does not expect an ugly price war over the next six weeks, which is the most important period for all retailers.

“In the fall, it’s our busy time and always a competitive market, so we expect it to be competitive, but we don’t see that it will be irrational. It will be normal, healthy competition,” LaFleche told Reuters.

“Not to minimize, it’s aggressive out there, but we are used to that and it usually is at this time.”

$1=$1.06 Canadian Reporting by Scott Anderson; editing by Rob Wilson

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