ByeBye ‘Dominion/AP&P, Hello to ‘Metro’.

Quebec’s Metro to spend $200 million to unfurl its banner in Ontario
Aug 07, 2008 12:16 PM

Business Reporter

The historic grocery store names, Dominion and A&P, will disappear from the Ontario landscape starting next month when owner Metro Inc. renames 158 supermarkets as part of a $200 million upgrade of the chain.

The Quebec-based company, which bought the Ontario stores from U.S.-based The Great Atlantic and Pacific Tea Co. three years ago, said the stores will be renamed Metro, the same name it uses on 200 supermarkets in Quebec.

Consumer research showed that people liked the urban-sounding name, the company said.

The strategy does not affect its Food Basics chain, which operates in the discount segment, competing against the likes of No Frills and Price Chopper.

Instead, the program is focused on what are called “conventional supermarkets,” the kind that include full-service bakeries and butcher counters, and compete more directly with Loblaws and Sobeys brand stores.

The move comes after Loblaw Cos. Ltd. announced it also plans to upgrade its conventional stores this year.

“The decision to rebrand under the Metro name is part of a long-term strategy to capitalize on operational and marketing efficiencies by uniting the individual strengths of our existing banners in Ontario and sharing best practices with our Quebec and Ontario stores,” said Metro’s president and chief executive officer Eric La Flèche.

Since the company bought the stores in 2005, it has invested heavily in integrating the management information systems and supply chain across the two provinces to cut costs and build a national platform.

The change to the Metro name will begin in Toronto in September with the conversion of the city’s Dominion stores, followed by the rollout of the Metro brand across Ontario.

Founded originally in the United States in 1859, The Great Atlantic and Pacific Tea Co. (A&P) first opened its doors in Canada in Montreal in the early 1920s and by 1929 was doing business in 200 cities and towns in Ontario and Quebec.

Toronto-based Dominion Stores was founded in 1927 and became Canada’s largest grocery store organization. Dominion was taken over by A&P in 1985.

A&P purchased Miracle Food Mart and Ultra Food Mart in 1989, and The Barn Markets, based in Hamilton, in 1995. Also in 1995, the Company opened its first discount store, Food Basics.

A&P Canada Co. was acquired by Metro Inc. in August 2005.

Besides the two biggest national grocers Loblaws (TSX: L) and Sobey’s (TSX: EMP.A), Metro (TSX: MRU.A) faces challenges from U.S.-based department store operator Wal-Mart and Toronto-based Shoppers Drug Mart (TSX: SC), which have increased their grocery sales.

In its financial statement released today, Metro reported it earned $92.6 million for the latest quarter, up 3.7 per cent from $89.3 million for the corresponding 2007 period.

That was still a good performance in an industry where price wars and higher operating costs are eroding profit margins.

Sales jumped just under one per cent to $3.37 billion from $3.34 billion for the corresponding quarter last year. Excluding decreased sales of tobacco products, sales were up 1.5 per cent over last year.

In its earnings report, Metro noted it had returned to profit growth in the third quarter, but with essentially flat sales. Earnings per share rose to 82 cents compared with 77 cents last year, an increase of 6.5 per cent.

“We resolved the issues associated with our new information systems in Ontario and achieved good performance in our Quebec operations,” said La Fleche.

Metro has a workforce of nearly 38,000 and is Quebec’s second biggest grocer and a growing food retailer in Ontario.

In early trading today on the Toronto Stock Exchange, Metro shares rose 93 cents to $26.37, a gain of 3.7 per cent.

– With files from The Canadian Press

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