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Bloomberg
Canadian grocer Metro Inc. is bracing for as much as C$50 million ($39.2 million) in additional costs next year due to a minimum wage increase in Ontario.
The Montreal-based company said it’s reviewing how to mitigate the impact of the measure on growth as it reported a decline in same-store sales and earnings that missed estimates. Profit for the third quarter ended July 1 rose to 78 cents a share, missing analysts’ average projection of 79 cents.
Metro, which operates both discount and regular supermarkets in Quebec and Ontario, has been using price cuts to get shoppers to spend more and offset the impact of food deflation. Its cost discipline has also helped support profit growth.
More penny pinching will be required as Metro and competitors such as Loblaw Cos. and Wal-mart Stores Inc. face a 32 percent increase in the minimum wage in Ontario over
18 months.
Longer term, Amazon.com’s acquisition of Whole Foods Market Inc. also has investors worried about increased competition in the home delivery market.
Metro shares have lost 3.5 percent since June 15, the eve of the Amazon announcement. Loblaw, which said last month month the minimum wage increases in Ontario and Alberta will cost an extra C$190 million, has lost 9.1 percent.
Revenue rose 1.4 percent to C$4.07 billion, more than the C$4.04 billion estimate. Same-store sales slipped 0.2 percent Impact of minimum wage will be C$45 million to C$50 million.