Metro Inc. CEO Eric La Flèche Says U.S. Tariffs Have Supplier Tensions Up During Q3 Financial Reports
MONTREAL, CANADA - When Metro Inc. reported its lower-than-expected earnings in its Q3 report, Eric La Flèche, President and CEO, explained that the dip might be due to tariffs. As the Canadian grocery giant faces pressures from suppliers to accept higher prices in lieu of pending tariffs from the United States, La Flèche stated that consumers should expect higher food prices in the future.
“We’re starting to get demands from some suppliers who are—whose products will be—affected by the new tariffs,” La Flèche stated in a conference call with analysts Wednesday morning after the company released its third quarter report.
As reported on by the Montreal Gazette, the Canadian government implemented tariffs on July 1, 2018 on several American goods, including yogurt, orange juice, and maple syrup, in retaliation for American-imposed tariffs on Canadian steel and aluminum products—which puts pressure on some Canadian food manufacturers. La Flèche noted that the company is currently reviewing suppliers demands and negotiating prices.
“If it’s legitimate and if it’s industry-wide, sometimes we won’t have a choice, and we will have to accept,” he said, before adding that the retailer has agreed to minor cost increases. Additionally, he expected both the market and the company would have to accept cost increases, even though Metro would fight to keep its retail prices competitive.
In the press release on the quarter itself, highlights included the following:
- Jean Coutu Group acquisition completed on May 11, 2018
- Sales of CAD $4.6 billion (US $3.5 billion), up 13.8% and up 2.4% when excluding the Jean Coutu Group
- Food same-store sales up 2.0%
- Net earnings of CAD $167.5 million (US $127.4 million), down 8.5%
- Adjusted net earnings of CAD $183.4 million (US $139.5 million), up 11.1%
- Fully diluted net earnings per share of $0.69, down 11.5%, and up 7.1% on an adjusted basis
- Declared dividend of $0.18, up 10.8%
Will other retailers see a dip in earnings due to tariffs? How will companies ensure competitive prices? AndNowUKnow will continue to report.