Financial Leaders Food: Inflation puts bread on Francois Thibault’s board

Rising prices bring their share of problems that companies need to juggle. At Metro, these problems are expressed in negotiations with suppliers, the departure of consumers to discount stores or private label products and the potential impact on gross profit.

Published at 10:00

Simon Lord
special cooperation

“My job is to control the growth of costs, as well as to control sales prices. And it’s not always easy in the current context of rising inflation, “said Francois Thibault, executive vice president, chief financial officer and treasurer of Metro.

One of the realities of price pressures is negotiating with suppliers. Since many of them are experiencing rising prices themselves, they need to raise them.

“It’s okay, we don’t mind,” said Francois Thibault. The company then sits down with them to understand what is causing their price increase.

“We just want to make sure these are good, legitimate reasons and don’t let some people take advantage of the situation to increase their profits. »

Fields to follow

Francois Thibault notes that if costs rise, Metro will not be able to fully translate these increases into price increases. In the future, if strong price pressures continue, the impact on profitability may be inevitable.


PHOTO EDUARD PLANTE-FRESHETTE, LA PRESSE ARCHIVE

Francois Thibault, Executive Vice President, Chief Financial Officer and Treasurer of Metro

Our industry is very competitive. We can’t smooth over all the upgrades we’ve been through. We need to absorb some of this.

Francois Thibault, Executive Vice President, Chief Financial Officer and Treasurer of Metro

Asked what share of the increase in these costs will be absorbed and what share will be transferred to price increases, Francois Thibault, however, did not say the exact figure.

“We have thousands of products,” he says. It is difficult to say in general, it changes every week. »

Consumers are looking for value

Consumers, like businesses, are trying to manage price increases as best they can.

In the first quarter, which ended in mid-December, the price of the grocery cart for Metro customers increased by 3.5%. For the last quarter, which ended in mid-March, growth was 5.0%, illustrates Francois Thibault. Therefore, consumers tend to turn to discounted brands.

At home, we see that people are more likely to go to product discount networks, such as our Super C discount banners in Quebec or Food Basics in Ontario.

Francois Thibault, Executive Vice President, Chief Financial Officer and Treasurer of Metro

If the margin among discount brands is lower, explains the CFO, operating costs, on the other hand, are lower, which at least balances the situation.

Moreover, without giving exact figures, he also explains that consumers are increasingly returning to the company’s own brands: Irresistibles, Sélection and Mieux-être (Life Smart).

“In the face of inflation, it is clear that our private brands are a good lever to offer valuable, quality products at more competitive prices,” he said. We are pleased to have a large portfolio of private label products to help our customers manage the price of their grocery cart. »