# Loblaw vs. Metro inc. - corporate food fight!



## maxandrelax (Jul 11, 2012)

I am looking to add to my consumer allocation in portfolio. Both of these are Investment Reporter recommendations for ConsumerD.

I shop at L all the time, use PC cards and go to Shoppers drugs for my drugs.
2% dividend
P/E 19

I never shop at Metro. I understand that they have made an agreement with Target for drugstores. They haven't made any big acquisitions lately like the other big grocery chains.
"The grocery chain gets a solid 86 per cent score, thanks to its lack of any earnings-per-share (EPS) dips in the past 10 years, its relatively low debt in comparison to its earnings, its $8.02 (Canadian) in free cash flow per share, and its stellar 12.3 per cent earnings yield." G&M Buffetology: http://www.theglobeandmail.com/glob...ks-warren-buffett-would-love/article14952820/
1.5% dividend
P/E 8 

What would you purchase?
THanks!


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## Sampson (Apr 3, 2009)

maxandrelax said:


> I shop at L all the time, use PC cards and go to Shoppers drugs for my drugs.
> 
> I never shop at Metro.


How much personal purchasing power do you have? can you affect a company's revenues? and growth.

How representative of a consumer are you?

Reasons don't seem very strong.


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## maxandrelax (Jul 11, 2012)

Samson, of course I don't really think I can influence anything. I guess it is just helpful to be able to recognize if quality/service changes over time. Plus it is psychologically nice to get dividends from companies who do a great job of taking money from you. Ie BCE, Rogers, Tim's, Starbucks...

Fundamentals and growth strategy should be the heavy weights.


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## Synergy (Mar 18, 2013)

I don't own either but if I had to pick one today I'd pick Loblaws. I like the recent Shoppers acquisition.

From a consumer standpoint, I much prefer shopping at Loblaws than Metro. I do however dislike how Shoppers forces customers to enter through the cosmetic section - inappropriate and unnecessary in my opinion.

There's lots of competition in this market and it's getting a little confusing but I like Loblaws as a brand. By confusing I mean being able to pick up your eggs and get your tires rotated at the same store - one stop shops. I swear I heard something about Canadian Tire wanting to trial selling milk, eggs, etc. in the past. That's getting a little much!


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## Xoron (Jun 22, 2010)

Synergy said:


> ...I do however dislike how Shoppers forces customers to enter through the cosmetic section - inappropriate and unnecessary in my opinion.


A little off topic, but I agree 100%. I (as a male) hate the perfume isle of Shoppers and avoided it like the plague. Now I'm forced to walk through it just to get into the store?

The store I that I frequent has this layout as well. I just go in through the exit (and sometimes have to force the door open) just so I don't have to go through the perfume isle. I've always meant to write a letter to shoppers about it, but never got around to it :tongue-new:.

As for Loblaws vs Metro. I generally dislike Metro (over priced and too small), but do shop at Loblaws regularly. But boy, they have some serious inventory problems. 1 out of every 3 or 4 times I go there, they don't have something. And it's not one department. Deli, bakery, meats, produce. And they always blame it on "supplier shorted us this week". So frustrating. Not sure I'd invest in either


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## Spudd (Oct 11, 2011)

Cosmetics are VERY high margin. The majority of shoppers are women, so if they force them to go through the cosmetics aisle they're hoping to entice them into buying these high-margin products on impulse.

I don't think I'd buy either stock personally, either. The P/E for Loblaws is high, and I just generally dislike Metro (although I do shop at Food Basics quite a lot, which is part of their empire). My cats refuse to eat Selection brand tuna fish, which is actually kind of scary.


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## Synergy (Mar 18, 2013)

Xoron said:


> I just go in through the exit (and sometimes have to force the door open) just so I don't have to go through the perfume isle.


ha-ha, I'll try that next time I have to pick up my mail in the back corner of the abyss...


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## Xoron (Jun 22, 2010)

Synergy said:


> ha-ha, I'll try that next time I have to pick up my mail in the back corner of the abyss...


That's the only reason I ever go in there too. Everything else (other than generic versions of the Shoppers products) are WAY overprice. And that reward program isn't worth the hassle.


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## fatcat (Nov 11, 2009)

..


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## Synergy (Mar 18, 2013)

Xoron said:


> That's the only reason I ever go in there too. Everything else (other than generic versions of the Shoppers products) are WAY overprice. And that reward program isn't worth the hassle.


I wouldn't know personally, but according to a few friends of mine Shoppers has some really good food pricing. My comment has always been, I'll pay a little more at Loblaws not to have to walk through a cosmetic section...


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## mrPPincer (Nov 21, 2011)

fwiw food basics (metro) is by far the best competitor in my rural area pricewise, followed by zehrs (loblaw), but I don't find zehrs very much different in price from all the small grocers around here.
Never been in a metro, & rarely ever go into a sdm & more time than not left emptyhanded on the rare occassion that I have.

I have considered buying metro stock in the past just because our food basics is so good & I like stocks who's companies I do feel good about, ie not BCE, PM, etc


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## andrewf (Mar 1, 2010)

I've always been pretty underwhelmed by food basics. The store brand products are often pretty terrible, though it seems Metro has been making some improvements.


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## donald (Apr 18, 2011)

Prob not a familiar stock/company but they have a large presence in the northern primaries and have somewhat of a moat is nwc(northwest co)worth a peak in this sector,I own it in my tfsa and it pays a healthy dividend and lacks competition in its niche market(from my research)its a Winnipeg based company started I believe in about 200 hundred years ago-smaller cap grocer.


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## Retired Peasant (Apr 22, 2013)

We have lots of choices around here No Frills, Sobeys, Foodland, Freshco, Metro, Independent We find metro overpriced, but go there for Eight O'clock coffee when it's on sale - love that coffee!


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## maxandrelax (Jul 11, 2012)

Retired Peasant said:


> We have lots of choices around here No Frills, Sobeys, Foodland, Freshco, Metro, Independent We find metro overpriced, but go there for Eight O'clock coffee when it's on sale - love that coffee!


Any comment about their fundamentals? The way I am thinking about this is an approach some take to buying the big canadian banks: Buy the one with the greatest dividend yield or lowest p/e in hopes that they get a little more competitive and meet the others in time. Will metro acquire? are there any options?


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## P_I (Dec 2, 2011)

How come the OP has excluded Empire Co (EMP.a), owner of Sobeys, from consideration?

I long ago voted with my investment cash and hold Metro (MRU), having swapped from Loblaw based on operating performance, or lack there-of in the case of Loblaw. One of Metro's somewhat hidden assets is a holding in Alimentation Couche-Tard. They monetized almost half of their stake back in January, see Metro enters into an agreement to sell a portion of its Alimentation Couche-Tard holding for more details.

Ultimately when comparing companies that operate in the same sector, an investor needs to understanding each companies strengths and weaknesses and what fundamental metrics they use on their own scorecard. If everyone evaluated companies the same way, we'd all come to the same conclusion and their wouldn't be a market. My $0.02, YMMV.


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## maxandrelax (Jul 11, 2012)

P_I said:


> How come the OP has excluded Empire Co (EMP.a), owner of Sobeys, from consideration?


can't buy em all. Also a great option. Didn't know about Metro's Couche Tard association.


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## Mall Guy (Sep 14, 2011)

. . . interesting that EMP.A finally came into the discussion ... where you get Sobeys (and Safeway?), 40 (+/-) % of CRR.UN, about the same amount of Genstar (and until very recently Empire Theaters, and a chunk of Wajax) . . . Loblaw (+ SDM) and CTC now following the REIT route (with HBC soon to follow) . . . so do you buy the REIT or the Retailer ???

And with the recent SDM and Safeway acquisitions, there are really very few others that could come into play . . . H.Y. Louie (IGA-BC + London Drugs), Save-On Foods, Longo's . . . Canadian grocery now mimics Canadian department store - fewer and fewer players . . .


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