Metro Inc.

Good morning, ladies and gentlemen, and welcome to the Metro Inc. 2024 Second Quarter Results Conference Call. Note that all participant lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. And if at any time during this call you require immediate assistance, please press star zero for the operator. Also note that this call is being recorded on Wednesday, April 24, 2024. At this time, I would like to turn the call over to Estelle Riva. Please go ahead.

Thank you, Sylvie. Good morning, everyone, and thank you for joining us today. I'm standing in for Sharon Kadosh with Absent Today. Our comments will focus on the financial results of our second quarter, which ended on March 16th. During the call, we'll present our second quarter results and comment on its highlights. We will then be happy to take your questions. Before we begin, I would like to remind you that we will use in today's discussion different statements that could be construed as forward-looking information. In general, any statement which does not constitute a historical fact may be deemed a forward-looking statement. Words or expressions such as expect, intend, are confident that, will, and other similar words or expressions are generally indicative of forward-looking statements. The forward-looking statements are based upon certain assumptions regarding the Canadian food and pharmaceutical industries, the general economy, our annual budgets, and our 2024-2025 action plan. These forward-looking statements do not provide any guarantees as to the future performance of the company and are subject to potential risks, known and unknown, as well as uncertainties that could cause the outcome to differ materially. Risk factors that could cause actual results or events to differ materially from our expectations as expressed in or implied by our forward-looking statements are described under the risk management section in our 2023 annual report. We believe these forward-looking statements to be reasonable and pertinent at this time and represent our expectations. The company does not intend to update any forward-looking statements except as required by applicable law. I will now turn the call over to Eric Laflèche.

Merci, Estelle. Good morning, everyone. Today, François and I are joined by Marc Giroux, CEO of All Our Food Banners, and Jean-Michel Coutu, President of our Pharmacy Division. You had a chance to meet them at our investor day last year, and we thought it would be helpful if they participated on the analyst call going forward. Francois will lead off as usual with the review of our financials, and I will follow with the quarter's highlights. The four of us will then answer your questions. So, Francois, up to you.

Thank you, Eric, and good morning, everyone. For the quarter, total sales reached $4,665,000,000, an increase of 2.2% versus the same period last year. food same-store sales were up 0.2%, and as we mentioned on our last call, sales in the second quarter were negatively impacted as the week preceding Christmas fell in the first quarter, whereas last year it fell in the second quarter. When we adjusted this shift, food same-store sales increased by 2.7%. On the year-to-date basis, which neutralizes the Christmas effect, food same-store sales stand at 3.1%. On the pharmacy side, same-store sales were up 5.9% for the quarter. Our gross margin stood at 19.9% of sales in the second quarter compared to 20.1% last year due to a slightly lower food margin. Operating expenses amounted to $496.2 million, up 6.1% versus last year. And as a percentage of sales, they were at 10.7% versus 10.3% in the same quarter last year. The higher ratio is mainly due to the startup of our new automated distribution center, for fresh and frozen products in Taliban. We also continue to have higher third-party e-comm fees than last year. We realized a gain on disposal of an investment in an associate company of 7 million in this quarter, and we have adjusted our net earnings by removing this gain. EBITDA for the quarter totaled 439.1 million, down 1.8% year over year, and down 3.5% when we removed the gains on disposal of assets of 7.2 million that we record this year versus a small loss of $300,000 last year. During the second quarter of fiscal 24, the company recorded $20.8 million of impairment of assets resulting from the decision to have Metro Stores in Ontario withdraw from the Air Miles Loyalty Program later this year. This impairment represents the entire carrying value of the Loyalty Program asset and is part of our adjustment to net earnings. Total depreciation and amortization expense for the quarter was $129.5 million, up $8.9 million versus last year, and a significant portion of the increase is due to our new tail bond, DC. Net financial costs for the first quarter were $34.1 million, compared with $28.3 last year. The increase is mainly due to an increase in debt and lower capitalized interest related to our distribution center automation project. Adjusted net earnings were $206.4 million compared to $225.4 million last year, an 8.4% decrease, and our adjusted net earnings per share amounted to $0.91, down 5.2% versus last year's EPS of 96. After two quarters in fiscal 24, capital expenditures amounted to $224.8 million versus $288.5 last year, and we are revising our capex outlook for the year downward to a level of about 650 million, in large part due to some real estate transactions that are either postponed or no longer considered. We are not reducing the investments in our retail network and our supply chain. On the retail side, in the first 24 weeks of fiscal 24, we opened four Super C stores, carried out major expansions and renovations of five stores for a net increase of 243,000 square feet, or 1.1% of our food retail network. Turning to in-store technology, we ended the quarter with 511 food stores and 109 pharmacies equipped with self-checkout technology. And as for electronic shelf labels, at the end of Q2, we had 376 food stores and 48 pharmacies equipped with that technology. Under our normal course issuer bid program, as of April 5th of this year, we have repurchased 3,945,000 shares for a total consideration of $276.9 million. representing an average share price of $70.18. In closing, our second quarter results are tracking well to the guidance we provided in November for fiscal 24, that is EBITDA to grow by less than 2% versus the level reported in fiscal 23, and adjusted net earnings per share to be flat to down 10 cents versus the level reported in fiscal 23. That's it for me. I'll now turn it over to Aaron.

Thank you, Francois, and good morning, everyone. Our second quarter was a very busy one with the bulk of the transition completed to our new automated fresh and frozen distribution center in Terrebonne. In that context, as we were cycling a strong quarter last year and with declining inflation, we are pleased with our sales performance and our results met our expectations. When adjusted for the Christmas shift, food same-store sales were up 2.7%. Our discount banners continue to fuel this growth, on top of the high comps and discount recorded last year. Our internal food basket inflation decelerated to about 3%, down sequentially from 4% and 5.5% recorded in the previous two quarters. Our food tonnage was flat in the quarter, with higher transaction counts in all banners, while the average basket declined. Facing cost of living pressures all around, customers continue to shop carefully and search for value. Similar to previous quarters, promotional penetration remains elevated. We see trading down in some categories and private label sales continue to outpace national brands. Our online food sales grew by 51% versus last year while the market was stable. Growth continued to be fueled by third party partnerships for same day delivery and the expansion of our click and collect service to our discount banners. Service is now deployed at Super C and in progress at Food Basics. We are now lapping the start of these initiatives, so we expect the year-over-year growth of online sales to moderate in the coming quarters. On the pharmacy side, we delivered a very strong performance with comp sales of 5.9% on top of 7.3% recorded in the same quarter last year. Commercial sales were up 5.8% on top of 12.2 in Q2 last year, driven by a strong cough and cold season, effective merchandising, as well as continued growth in HABA and cosmetics. Prescription sales were up 6%, driven by organic growth, specialty medications, and professional services. We continue to record significant growth in pharmacy services, and in the first 24 weeks of this fiscal year, we documented more than 1.9 million clinical acts and services performed through our network, a level in line with our leading position in Quebec. We are well positioned to deliver on the expanded role of pharmacists with our dedicated pharmacist owners and our leading footprint across Quebec. We continue to be pleased with our Moi Loyalty program in Quebec, which now reaches close to 70% of Quebec households. As members become more digitally engaged with our channels and offers, engagement metrics increase while providing more value to our customers. Most recently, the 2024 Léger WOW survey recognized Moi as the most widely used loyalty program in Quebec, with 79% of Metro customers actively engaging with the program. Building on the successful launch of MOA loyalty program in Quebec, we are pleased to announce today the launch of MOA Rewards in Ontario at all 275 Metro and Food Basic stores later this year. MOA Rewards will allow members to realize greater savings by accumulating points in our two Ontario banners. More details will be communicated in due course. Turning to our Terrebonne Automated DC, As I said earlier, our second quarter was very busy for our teams with the transfer of the fresh meat, deli and ice cream volumes to our new facility. We also closed two older distribution centres in Montreal. We have now completed the bulk of the transition to our new Terrebonne DC with only dairy products left to be transferred. We are on track with the planned expenses and we are pleased with the service level to our stores. Going forward, our teams are focused on ramping up productivity, and we are now also gearing up for the launch of the final phase of our Toronto automated fresh facility next summer. So to conclude, fiscal 24 is a transition year with the startup of two large new automated distribution centers, but we are confident that our sustained investments in our supply chain, our retail networks, and our digital capabilities will position us well for the future and create long-term value for shareholders. Thank you, and now we'll be happy to take your questions.

Thank you. Ladies and gentlemen, if you would like to ask questions at this time, please press star followed by one on your touchtone phone. You will then hear a three-tone prompt acknowledging your request. And if you should wish to withdraw from the question queue, simply press star followed by two. And if using a speakerphone, please lift the handset before pressing any keys. Please go ahead and press star one now if you have any questions. And your first question will be from George Dumais at Scotiabank. Please go ahead.

Yeah, good morning. Eric, I thought you were a little bit cautious on the front score performance for this quarter, but it was very strong. Can you talk a little bit about, I guess, what you call out effective marketing strategies and what really happened there?

Thanks. Well, the number one driver is a strong coffee cold season, which really started in mid-December. So Q2... benefited from that and the increased traffic that that brings to our stores. So combined to effective merchandising, we were able to record really strong front store sales on top of really strong last year, which was the trifecta with COVID and all those symptoms. So I think the teams did a great job. Maybe Jean-Michel, if you want to add some color.

Yeah, I won't get into all the different tactical initiatives, but we reviewed completely our merchandising strategy. We adjusted it for the market as it's evolving. And the team did a great job anticipating the customer demand. And that shows in the results. Okay.

And how much was – if you look at pricing for HABA, the HABA category, how much was it up by this quarter? You're talking about inflation in HABA?

Yeah. Correct.

Yes.

Lower single digits.

Yeah. That's our internal reporting based on the way we calculate it.

Okay. Okay. Okay, thanks for that. And Francois, can you give us a little bit more color on the lower CapEx? I think you mentioned CapEx is expected to come down next year, but as you look beyond, can we see perhaps some more investments in automated dry goods? Would that have a similar return overall than fresh and frozen?

Well, as I said, we're revising our outlook down to $6.50 because of some real estate transactions, which for competitive reasons I won't go into. And now, as I said, we're not reducing any investments in our store network or DCs. So nothing to announce on any other automation projects. If we do, we'll do it in due course, but nothing to announce right now.

Okay, I got one last question. Maybe a bit of a crystal ball question, but we've seen inflation come in below 2% for March. Is your view that maybe this inflation continues towards one or zero, or do you think we stabilize at these levels given kind of the weather, geopolitical factors, et cetera?

Well, it is a crystal ball question. Yes, inflation is decelerating quickly in March. We'll see going forward. As we told you before, we planned for 3% inflation for the year. It was slightly above that in the first portion of the year. It looks like it may be a little below that for going forward. But, again, we don't have a crystal ball. There's still some CPG cost inflation. It's back to more normal levels, but it's not zero. So, you know, 2% to 3% sounds like a crystal ball number that I would go with. But, again, it's all speculation.

Okay. Thanks for your answers. I'll pass the line.

Thank you. Next question will be from Irene Lattel at RBC Capital Markets. Please go ahead.

Thanks, and good morning, everyone. Just sticking with the front of store, wondering what perhaps the beneficial impact of the MOA program and PJC might have been, and was that a contributing factor to the front of store print?

Definitely, yes. Moi is gaining traction in our pharmacy network every month, so more people sign up, more people get engaged. So it's still a work in progress. It's not at the same level as Métot, which had Métot et Moi, as you know, Irene, for a long time. But we're pleased with the engagement, and there's a lot of cross-shopping going on between our banners. So, yeah, I'm sure that was a contributing factor to pinpoint the exact – you know, percentage of the lift. It was caused by moi, it's really hard to do, but it's a contributing factor, no doubt.

And just following up on that, Eric, thank you. Is it also safe to assume that it's a contributing factor to better front of store demand at the Brunet stores?

Yeah. Yes. It's a less, it's less of a percentage of sales front store in Brunet versus Couture, but it's significant, and moi is is gaining traction there as well. There was no loyalty program at Brunet before. Couture had another program. They switched to moi. Brunet didn't have one, so it was a plus for customers, and they're engaging with it.

That's great. Thank you. And then just, you know, I guess my usual question, you provided a little bit of commentary or a little color to your commentary, but In terms of, you know, consumer behavior, competitive intensity, you know, you noted that private label growing faster than national brands, but can you talk a little bit about maybe incremental penetration of promotional items, some of the trade-down behavior, and again, competitive intensity? Thank you.

Well, maybe I'll let Mark, you want to comment on that?

I think you've said it well in your introduction. The market continues to be competitive. While food inflation is stabilizing, overall, the economic context is putting lots of pressure on Canadian consumers. So consumers are continuing to trade down in some categories, meat in particular. They're participating to private label. The growth of our private label is twice the growth of our national brand. And promo penetration is back to pre-pandemic level. and are elevated, and the discount growth in our discount channel is greater than conventional. So similar trend as the previous quarter, but we're well positioned with our commercial strategy and our store network to capture customer demand.

That's great. And just in terms of the depth of the competitive activity, are you seeing any step up in the magnitude, or how deep the promotions are, or that's pretty stable?

I'd say that's pretty stable. It's a competitive market, but stable to previous quarter.

That's great. Thank you.

Thank you. Next question will be from Enliso at Primo Capital Markets. Please go ahead.

Hi, thanks, and good morning. So that's for the tariff on DC. Now that most of the categories are completed except for dairy, have you – Is all the volume up to full production? Like, is there any execution risk in the ramp up now to full productivity, or is this already in? We just wanted to know if these categories are de-risked.

Well, the execution risk is largely behind us because we have completed most of the transition, and it's going well, like I said in my opening statement. Huge heavy lifting by our teams and coordinating with our stores and our merchandising to be seamless at store level. So very pleased with the transition so far. Some work ahead of us for dairy, but the focus is now on productivity. So the execution risk is, there's always an execution risk, but the teams are executing really well. Service levels to our stores are good. And now it's a question of adapting and adjusting and ramping up productivity. So as planned. So we're ahead of our plan. on duplication and efficiencies. Yes, there are some, but it's slightly better than we expected, and we're confident that we're going to get through this and be in great shape coming out for next year.

Okay, great. Can you also remind us how and when the duplicative costs will roll off, and when should we see these efficiency gains?

Well, you'll see efficiency gains going forward. So every month we improve our productivity or we aim to improve our productivity. So next year will be a better year with less duplication and efficiency. So we're going to see lower expenses next year for sure. We will plan accordingly. But it's a big investment with – depreciation, less capitalized interest, so that's staying with us. That's going to be around next year. We're going to be more efficient in our logistics, so confident that we're going to be meeting our objectives for these large projects.

Okay, thank you very much. Thank you. Next question will be from Chris Lee at Desjardins. Please go ahead.

Good morning, everyone. Eric, you mentioned that transaction counts were up across all banners, which obviously would include conventional. Just here, is that partly because inflation is moderating? And more specifically, did the increase in transaction counts at conventional stores kind of pick up in the latter part of the quarters as inflation continued to moderate?

Thanks. I don't think it's linked to inflation. I think it's people shopping around and searching for value. So the traffic has been up for the whole year in all of our banners, conventional also. So the basket decline is a bit steeper in conventional, but I think it's just people being very careful shopping around. So we have to be really competitive week in, week out, and we are. And our conventional stores are holding up well relative to their peers. So I'm pleased with that.

Okay, so no really big improvement in terms of the consumer, I guess. Like everything you just said, the trade-on and all that is still very relevant right now. Yes, sir. Okay, that's helpful. And then the question I have is I think this is maybe the first time in a while where your food basket inflation was slightly ahead of food CPI, whereas before I think it was averaging around 1% below. Is there any reason for that, or am I just reading too much into this?

Don't read too much into it. 3%, 2.5%, it's within a pretty narrow band. This is what we sell in our stores. It's our mix. It's a function of promotions year over year. So, you know, let's say the dollar, rather, the $0.99 ad in discount is pushed by a week. It has an impact on inflation and the border. So I would say it's pretty much in line with CPI.

Okay, that's helpful. And Francois, maybe one for you. I know I asked you this last quarter. Just curious, would your SG&A expense rate be largely stable versus last year if you exclude these duplicated costs and learning curve efficiencies from the new DCs?

Yeah, so similar as what I said in Q1, Chris, is that when you remove these duplicated costs and extra expenses, the SG&A as a percentage of sales will be quite similar to last year. So we're we're pleased overall with a 6.1% increase given all this in the context we're in. So similar conclusion to what I said in Q1.

Okay, that's helpful. And maybe the last one for me as well, Francois, just on CapEx, now that you have revised down year-over-year, I know in the past you've mentioned that for fiscal 25 and beyond, you'll go back to that $500 million level. For next year, should we expect that to be up higher than $500 because you kind of push back some of these real estate transactions?

I'm not ready to give an update for next year, but a run rate would be, you know, sort of a high, mid-500s and around the mid-500s level, normal run rate.

Okay. Thanks very much. Thank you.

Thank you. Next question will be from Vishal Sridhar at National Bank. Please go ahead.

Hi. Thanks for taking my questions. Back at... Turning to Jean Coutu, the front store performance, very strong, as has been noted. Was the performance strong across the board, or was it OTC that lifted that comp to above what probably most expected?

Yeah, as Eric mentioned, it's opening those performances strong across the board. So OTC, obviously, due to the cough and cold season, HABA cosmetics are performing well. So all our core categories are growing very well.

Okay. And the consumer weakness, which is causing the shift towards promo and the shift towards discount, are we seeing similar trends in Jean Couture or some of the categories like beauty a bit more resilient?

We like to think there's a bit more resilience, but we are seeing consumers shopping for value. We are in an advantageous position. Value perception is very strong with the Jean Cousteau brand, particularly. But we are seeing a lot of conversion to private label and promotional.

Okay, thank you. Moving on to the MOA program, for the Ontario launch, should we expect that to be somewhat of a duplicate of the Quebec program in terms of capability and in terms of the offer, what's going to be presented to the consumer?

It will be similar. The details of the program will be communicated as we get closer to launch for competitive reasons. But yeah, it's our platform proprietary program in Quebec, which we launch and we're happy with and we control and we own. So we thought it was the best for us to go forward in Ontario to launch. to provide a strong program to our customers so they can generate even more savings in all of our banners. So, yeah, so we're pleased to extend it. It's a good program. I think consumers will like it, and we will communicate the details as we get closer.

Okay. And in terms of the MOA's interest to even expand further, obviously strong traffic at Metro's banners, is there opportunity – at some point in the future, to entertain or engage in some sort of coalition program bringing in partner retailers, or is that not on the radar for now?

Not at the present time, no.

Not at the present time, but you never know. We have a good program in high-frequency channels of drug and pharmacy, food and pharmacy, so in Quebec, and we'll be in food in Ontario, so you never know. There could be partners that join and leverage that, but not for now.

Thank you. The first step of our strategy was to bring loyalty under one program across Quebec, Ontario, New Brunswick, for all of our pharma and food customers, and that's what we'll be completing by the end of the year, and we'll see after that.

I appreciate that color, Mark.

Thanks.

Thank you. Once again, ladies and gentlemen, if you would like to ask a question, please press star followed by one. on a touchstone phone. And your next question will be from Michael Van Elst at TD. Please go ahead.

Hey guys, it's Evan in for Michael. Most of my questions have been answered, but I guess I just wanted to touch briefly on the food gross margin. Where is the pressure coming from? Is it all market factors? Or did the DC ramp up contribute to that? Or was there something else as well?

Well, you know, the pressure on gross margin is 16 basis points year over year for the company. Food is causing or driving it. So I wouldn't read too much into it. We were cycling a normal quarter. It's a competitive market, no question about that, and we are competitive. Shrink was a little bigger issue in this quarter, managing it, but it did contribute a little more to the decline. The discount mix, as we overperform in discount, that's affecting the gross margin line a bit. And like you pointed out to the inefficiencies in Tabun, that's also a small contributing factor. So a bunch of puts and takes. Overall, it's not a huge concern, but we're monitoring very closely the gross margin for sure.

Great, thanks. And in terms of the duplicate overhead costs, could you give us maybe like a percentage of how much was in the first half numbers versus how much you're expected to be in the second half numbers? And are all those costs in OPEX or are some of them in costs of goods sold as well?

So we're not going to break it down in percentages. What we said was that the first part of the year, there will be more pressure than the latter part. And as I said, the first two quarters, when you remove those costs, the percentage of G&A on sales is very similar to last year. So we're not going to be providing a breakdown. But what's the last part of your question, sir? Okay.

Were they all in OPEX or were there some in... The bulk of it is in OPEX.

There's a slight portion in gross margin, as Eric said, which explains a bit of the pressure on the gross margin.

Okay, great. Thank you. Yes, thank you.

Thank you. Next question will be from Mark Petrie at CIBC. Please go ahead.

Yeah, thanks, and good morning. Eric, I know you called out flat tonnage. I think it was up probably slightly last quarter. I'm guessing it's not a material change in trend, but just hoping you can comment on unit growth overall. I know it's been tough for the industry. I'm just wondering if you're seeing trends shift at all. I'll let Mark take that.

Well, if you look at tonnage as inflation is stabilizing, tonnage will most probably start to increase again. But overall, tonnage is growing in discount, slightly declining in conventional. So, overall, our tonnage was flat.

Understood. Okay. And I know you've spoken about the consumers continuing to seek out value. I'm just curious if, and discount outperforming full service, just curious if that gap between the two growth rates has changed at all, if it's expanding or narrowing or consistent.

When we look at industry data, the gap between the growth of discount and conventional is stable, 24 weeks, 12 weeks, four weeks. So I think we talked about the consumer looking for value, so that trend has not changed. We're comping significant growth in discount last year. So that's contributing. And we've opened new stores in discount. That's also contributing to discount growth.

Yeah, understood. Okay, that's helpful. Thank you. And then just one, not sure how much you can say, but, you know, with e-commerce growth normalizing and some of the sort of big shifts in the rearview mirror, would you expect that that has any impact on your P&L and either of the margin rates? You mean the e-commerce stabilizing?

Could you clarify your question?

Yeah. Yeah. With e-commerce growth slowing down and you guys sort of, you know, having added the partners and expanded to all your banners and all those sorts of shifts, do you expect that a more modest growth rate in e-commerce will have any impact on your P&L and your margin rates?

For sure, and the mix, if e-com is stabilizing, it will help for sure. Our online sales has continued to grow, as Eric has mentioned it, fueled by a third-party partnership and our click-and-collect services that have been deployed in Quebec and is in ongoing deployment in Ontario. We see the growth in e-com moving to discount and click-and-collect services, so we're satisfied with that growth as well. But as we are copying these new initiatives, we expect that growth to stabilize. Yeah, understood.

Okay, appreciate all the comments. Just to finish on that, so the impact on our P&L, as we get better at it, as the business stabilizes, the P&L picture improves. So it's improving year over year, and we suspect that that should continue.

Yeah, understood. Got it. Okay, thanks for the comments, guys. All the best.

Thank you. Next is a follow-up from Chris Lee at Desjardins. Please go ahead.

Hi, good morning. Just maybe a follow-up to the last question, discussion on e-commerce. I'm just wondering more of a big picture question, like what do you think needs to happen for the industry e-commerce penetration in Canada to get closer to the U.S. or to the U.K.? Or do you believe there are structural reasons that would keep e-commerce adoption low for longer in Canada?

Hey, this is a big-picture question. So like we've said before, we try to stay ahead. We want to serve our customers wherever they want to be served, online or in-store. The share of e-com in Canada is lower than some other countries. There is some growth, but it's modest growth. It's the Canadian consumer, so we want to serve our customers as best we can. Those who want to be online, we will serve them, but that number is... It's a lower number. Will it grow? Will it vary by geography? We're actively involved and we're trying to meet that demand as it comes. That said, we're pleased with how we went to market. We have a hybrid model. We have our own functions to pick and store and deliver. We have a dark store. We have a third party. We have pick and collect. So same day, next day, we try to cover the range of services that customers want and and do it in a way that will not be too dilutive to earnings and eventually contribute at a better level. So, you know, it's hard to say. The reasons why it's a bit lower in Canada, I think it's the search for value, the convenience of food shopping, the buying behavior, gives the numbers that we have. So we'll see how it evolves and we intend to participate.

Okay, that's great. Eric, and maybe another one for you. I understand you may not be able to comment on this, but as you know, there have been media reports that the government is looking to entice new entrants into Canada to try to foster more competition. For those of us who are not as familiar with the industry, practically speaking, how easy or how hard do you think it would be for a foreign player to come in?

Well, all I can say is that the Canadian food market is very competitive. Any affirmation that our industry is not competitive, we disagree with that completely. We compete with large global players. We have strong regional and national competitors. We have strong local independents. We have discount dollar stores, you name it, Amazon, Walmart, Costco. This is an extremely competitive market. It's a large geography with a growing population, but for the geography, a pretty small population, so we'll see if anybody wants to come. It's an open market, and if someone wants to come in, they will do what they have to do, but it's a very competitive market.

Okay, thanks for that. And maybe the last one for me, for Francois, just more for modeling purposes. As we look out for Fisco 25, I want to just touch on quickly on two things. I guess first, I want to confirm that somebody's DC duplicated cost will flow through into fiscal Q1 of next year. And then secondly, I want to just check in with you to see if you can share any comments with respect to the cost related to the launch of the new loyalty program in the fall in Ontario. Thank you.

Well, some of the duplication costs will flow through Q1, but we're expecting them to be lower. We are launching Phase 2 of our fresh automated DC in Ontario, so that will also have an impact going forward in Fiscal 25, but improving so that we were able to say that we will be back to our normal growth profit increases for Fiscal 25, so no change on that.

For the cost to launch Moi in Ontario, like I said, we'll give you more details as we get closer. Yes, we will have some marketing expenses to launch a program, but we intend to manage that as part of our marketing budgets to a large extent, and we'll keep you posted as we get closer. Exactly. Okay.

Thanks, guys, and all the best.

Thank you. And at this time, we have no other questions registered. Please proceed.

Thank you all for your interest in Metro, and please mark your calendars for our third quarter results on August 14th. Thank you. Thank you.

Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending, and at this time, we ask that you please disconnect your lines.