Metro Corp. (TSE: MRU, OTCMKTS: MTRAF) posted their Q2 2020 quarterly report today.
Revenue came in at C$3.99 billion ($2.82 billion) which was up 7.8% compared to the same quarter last year and 9.7% compared to the previous quarter.
EPS surged 47% to C$0.69 with Covid-19 representing a net increase in profit of about C$0.03 cents per share.
The management had stated it had received a very sizeable bump in sales as a result of the COVID-19 outbreak, with the company expecting only around 5.2% since last quarter if the outbreak had not occurred.
“A significant surge in sales, especially in the last week of the quarter, was unprecedented and required the mobilization of all our resources to ensure the safety of our employees and customers, the resiliency of our supply chain and the operations of our food stores and pharmacy” Said the CEO, Eric La Fleche on the conference call with analysts.
Management also stated that same store sales were up 25% in the first 4 weeks of Q3 2020 which began on March 15.
Metro began implementing social distancing rules back in March as the Canadian government imposed rules to try and mitigate the spread of the coronavirus. For Metro this means limiting the amount of customers allowed within the store at any given time and insisting that customers stay 6 feet apart from each other at all times.
The company noted that although foot traffic has decreased dramatically as a result of social distancing, the amount of goods purchased per basket has skyrocketed.
Furthermore, Metro saw a big increase in the amount of people ordering products online. The company has partnered with CornerShop, a grocery delivery company, in order to handle the increased demand.
However, all this increased business comes at a cost. Metro has been forced to increase its operational costs significantly such as paying all its retail works an additional $2 per hour.
It would be interesting to see how it would impact Metro’s margins if this crisis drags on for longer.
We see that Metro’s EBITDA Margin comes in around middle of the road compared to some of its peers like Loblaw Companies limited, and Empire Co. Ltd which owns the popular Canadian grocery chain Sobey’s and Freshco.
Shares of Metro on the TSX was up just over 1% today over this news.
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