Restructuring fuels Metro’s gains

Article Excerpt

METRO INC. $37 (Toronto symbol MRU.A; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 111.4 million; Market cap: $4.1 billion; Price-to-sales ratio: 0.4; SI Rating: Average) operates roughly 660 grocery stores in Quebec and Ontario. Metro, Super C and Food Basics are some of its major banners. Metro also operates or supplies 270 drugstores, and owns about 23% of Quebec-based convenience-store operator Alimentation Couche-Tard Inc. (Toronto symbol ATD.B) To reduce its reliance on Quebec, which accounted for nearly all of its revenue, Metro bought A&P Canada for $1.7 billion in 2005. The chain consisted of 240 food stores in Ontario, mostly under the A&P and Dominion names. Sales, earnings surge after purchase Adding A&P nearly doubled Metro’s sales, from $5.9 billion in 2004 to $10.7 billion in 2008 (Metro’s fiscal year ended September 30). If you exclude the cost of integrating these new stores, earnings rose from $1.72 a share (or a total of $168.8 million) in 2004 to $2.53 a share (or $295…