Metro adding self-checkout units and testing Scan-and-Go to deal with wage hikes

Metro Inc. will soon test scan-and-go technology and increase the number of self-checkout machines in its grocery stores as it looks to offset higher minimum wages in Ontario and Quebec.

The scan-and-go system still at the experimental stage allows customers to scan items as they put them in their shopping cart and pay as they leave the store.

Walmart has scan-and-go technology in some Canadian stores while Amazon is also testing its own system.

Metro says it will run a scan-and-go pilot project at an undisclosed Quebec store, despite some past reliability problems.

The Montreal-based company will also add more self-checkout machines, particularly in Ontario where the minimum wage was increased to $14 an hour and is projected to rise to $15 next January.

"We didn't have 20 per cent fat in our system so clearly there's going to be an impact," CEO Eric La Fleche told reporters Tuesday after the company's annual meeting.

Metro estimates the higher minimum wage will cost $35 million for its current financial year, rising to between $45 million and $50 million per year when the full Ontario wage increase is implemented. A wage increase of 75 cents per hour to $12 in Quebec will be less of a challenge, it said.

Metro has automated self-scanning check outs in 30 Metro stores in Ontario and plans to add them in seven more stores by the end of summer and six at its Food Basics discount banner in the next few months. No details about the automated systems in its Quebec stores was immediately available.

The chain is also looking to mitigate increased costs by testing electronic store shelves, increasing automation at its new Ontario distribution centre and cutting hours at some stores.

La Fleche also defended the company's actions in an alleged price-fixing scheme being investigated by the Competition Bureau that saw Loblaw acknowledge in December its participation over about 14 years. Canada's largest supermarket chain brought the information to the Competition Bureau, resulting in immunity from criminal proceedings.

Metro has denied any wrongdoing and criticized Loblaw for misleading the public and making other retailers appear guilty.

"We refute and condemn the allegations of industry-wide collusion," La Fleche told shareholders.

He said an internal investigation has uncovered nothing to suggest that the company broke the rules.

Montreal-based Metro boosted its quarterly dividend nearly 11 per cent after its profits surged in the first quarter with proceeds from the sale of its stake in Alimentation Couche-Tard Inc. to help fund its deal to buy the Jean Coutu Group Inc., which is expected to close this spring.

The company will pay 18 cents per share on March 13, up from 16.25 cents in the prior quarter.

Metro started its financial year by earning nearly $1.3 billion or $5.67 per share, compared with a profit $138.1 million or 58 cents per share in the same quarter a year earlier.

Sales for the 12 weeks ended Dec. 23 totalled $3.11 billion, up from $2.97 billion.

Same-store sales, a key retail measurement of the performance, were up 3.4 per cent or 1.2 per cent excluding the inclusion of the Christmas week. Profits were also helped in the quarter by a 0.5 per cent increase in food prices and increased volumes sold.

On an adjusted basis, Metro said it earned $153.4 million or 67 cents per share, up from $138.1 million or 58 cents per share a year ago.

Analysts on average had expected a profit of 59 cents per share and $3.02 billion in revenue, according to Thomson Reuters.

Irene Nattel of RBC Capital Markets described the solid results as a "tasty start" to fiscal 2018.