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A Metro store photographed on April 15, 2019, in Ste-Therese, Que., north of Montreal.

Ryan Remiorz/The Canadian Press

Metro Inc. reported strong food sales amid higher prices for fresh fruit and vegetables in its most recent quarter, although the company expects produce costs to moderate close to summer.

“Normally we would expect produce inflation to level off as we start to buying more locally, but we’re not there yet, especially with this long winter,” chief executive Eric La Flèche said during a conference call with analysts on Wednesday.

The grocer’s internal measure for food inflation rose 2.5 per cent over the 12 weeks ended March 16, while its food same-store sales, a key retail metric, moved up 4.3 per cent.

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Statistics Canada released figures on Wednesday that showed produce led the rise in food inflation this past March. Canadians paid 15.7 per cent more for fresh vegetables and 8.6 per cent more for fresh fruit last month compared with March, 2018, according to its data.

Mr. La Flèche said he expected inflation on produce to be closer to 2 per cent for the remainder of the year.

“But we don’t have a crystal ball,” he said.

However, Mr. La Flèche noted that there are also signs of meat inflation down the road, pointing to China’s issue with pork production as it grapples with an outbreak of African swine fever in its pig population.

It’s hard to say whether that will have a domino effect on other meat prices, he said.

So far, the company has found it pretty manageable to protect its profit margins by mixing up its product offering, he said.

Metro also said it is piloting its delivery offering in Toronto and expects to launch in the Greater Toronto Area in the next few weeks. The company already operates what it calls click-and-collect and home delivery services in Quebec.

The comments came as the grocery-and-pharmacy chain said it earned $121.5-million or 47 cents a diluted share during its second quarter, up from a profit of $106.9-million or 47 cents a share a year ago.

Sales totalled $3.7-billion, up from $2.9-billion. Excluding the Jean Coutu Group, Metro said sales were up 4 per cent compared with a year ago. Pharmacy same-store sales gained 1.1 per cent.

On an adjusted basis, Metro said it earned 60 cents a share for the quarter, up from an adjusted profit of 47 cents a share a year ago.

Analysts on average had expected a profit of 63 cents a share and revenue of $3.73-billion, according to Thomson Reuters Eikon.

The company also announced that François J. Coutu will retire as president of the Jean Coutu Group (PJC) Inc., Metro’s pharmacy division, on May 31. Alain Champagne has been named as his successor.

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