Stock market news for investors: Metro profits rise, Groupe Dynamite to close some Canadian stores

Some U.S. vendors have production outside the country and are leaning more on that to get around the tariffs, said La Flèche. He gave the example of large berry vendors like Driscoll’s.

“They have fields in Mexico, and some of the berries that we’re selling these days are coming a lot more from Mexico than the U.S,” he said. 

Metro reported a second-quarter profit of $220 million, up from $187.1 million a year ago, as its sales rose 5.5%. The profit amounted to 99 cents per diluted share for the 12-week period ended March 15, up from 83 cents per diluted share a year earlier.

In its outlook, Metro said it faces an uncertain environment.

“As we begin our third quarter, we face an uncertain economic environment. It is difficult to predict how the situation will evolve and how it will impact consumers and our business,” said La Flèche. 

“We’re confident that we’ll continue to grow, but there’s volatility and uncertainty, and that affects customers, and it ultimately can affect businesses.”

Sales for Metro’s second quarter totalled $4.91 billion, up from $4.66 billion in the same quarter last year, helped by the transfer of two significant pre-Christmas shopping days to the second quarter.

Food same-store sales were up 5.3% in the quarter and up 3.9% after adjusting for the Christmas shift.

Pharmacy same-store sales were up 7%, helped by a 7.8% increase for prescription drugs and a 5.3% increase in front-store sales. Front-store sales were up 3.7 per cent after adjusting for the Christmas shift.

On an adjusted basis, Metro said it earned $1.02 per diluted share in its latest quarter, up from an adjusted profit of 91 cents per diluted share a year earlier.

“Agility isn’t a tactic, but it’s our mindset,” he said on a call with analysts who were told no less than 12 times that “agility” is the company’s current mantra.

Its adoption of that modus operandi has come as apparel retailers have been plunged into a world of uncertainty because of tariffs the U.S. has been imposing on dozens of countries. 

Many of the duties have targeted Canada, while others are aimed at giants in the clothing manufacturing world such as Bangladesh, Cambodia, China, India, Indonesia, Malaysia, Pakistan, Turkey and Vietnam.

International brands worry the tariffs will dampen consumer spending and make production and shipping more expensive, forcing them to pass along elevated costs to consumers.

Lutfy thinks his company is well positioned to weather the storm, in part because it has raised its prices “successively through the years at a rate much faster than the rate of inflation.”

“I know that’s not going to change any time soon,” he said.

However, consumers may become less able to absorb such increases as the tariff war wears on, putting pressure on their wallets and causing some to rethink discretionary purchases like clothing.

While Lutfy acknowledged “there’s anxiety out there,” he saw apparel as being a more immune category than Jet Skis, cars and furniture, which he pointed out people often buy with debt financing.

“In these recessionary times, often enough, a cute, $30 top that puts a big smile on your face is sometimes just what it takes to get you through the week,” he said.

He is so confident in the average consumer’s interest in buying clothes even during a difficult economic period that he said, “I actually do like these times.”

“I don’t have an issue with it,” he said. “As a matter of fact, we see it as an opportunity to take market share.”

To accomplish that task, the company has been shifting its supply chain away from China and toward Bangladesh, Cambodia and Vietnam.

The company had long been planning to “de-risk” itself by moving away from China, but the tariff talk “escalated” the plan, Groupe Dynamite’s president and chief operating officer Stacie Beaver said on the same call as Lutfy.

It was also coupled with a decision to sign an agreement with a third-party logistics provider to open a U.S. warehouser this July that Groupe Dynamite hopes will speed up shipping times.

The window Groupe Dynamite offered into its operations came as it reported a fourth-quarter profit of $31.0 million, up from $28.6 million a year earlier as its revenue rose 13%.

That profit amounted to 28 cents per diluted share for the 13-week period ended Feb. 1 and was up from a profit of 27 cents per diluted share in the company’s fourth quarter a year earlier which included 14 weeks.

Revenue for the quarter totalled $271.8 million, up from $240.3 million.

Groupe Dynamite attributed the growth to a 9.5% increase in comparable store sales and contributions from new stores. 

On an adjusted basis, Groupe Dynamite said it earned 33 cents per diluted share, up from an adjusted profit of 28 cents per diluted share a year earlier.