Q3 2023 Metro Inc Earnings Call
Good morning, ladies and gentlemen, and welcome to the Metro Inc. 2023 third quarter results conference call. At this time all lines I listen only mode. Following the presentation. We will conduct a question and answer session. If at any time. During this call are required immediate assistance. Please press star zero for the Apple later this call is being recorded on Wednesday August nine 2023.
I'd now like to turn conference over to Mr. Shang Kadosh manager Investor Relations and Treasury. Please go ahead Sir.
Good morning, and thank you for joining us today, our comments will focus on the financial results of our third quarter, which ended on July 1st with me today is Mr. Eric La Fleche, President and Chief Executive Officer, and profitable Executive VP and Chief Financial Officer during the call we will present our third.
Third quarter results and comment on its highlights. We'll 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 forward looking statements, what where their expressions such as expect intend or confident that will and other similar words or expressions are generally indicated are forward looking statements. The forward looking statements are based upon certain assumptions regarding the Canadian.
Food and pharmaceutical industries, the general economy, our annual budget and our 2022 2023 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 Steve.
Men are described under the risk management section in our 2022 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 statement, except as required by applicable law I will now turn the call over to Francois.
Thank you Sharon and good morning, everyone.
Total sales for the quarter were $6 4 billion, an increase of nine 6% over last year with food same store sales up nine 4% in the quarter and pharmacy same store sales up five 9%.
When you adjust for the $5 3 million of direct costs related to the one week labor conflict that was included in the gross profit of last year gross margin is down 20 basis points. The reduction reflects the depth of the decline in our food gross margin as we continue to absorb part of the cost increases and as the shift to discount is still prevailing.
Operating expenses increased 8% to stand at 656, $658 6 million or 10, 1% of sales versus 10, 3% of sales last year.
The third quarter was impacted by $5 1 million of launch costs related to the launch of our loyalty program work as well as fees related to higher online partners yourselves.
Included in Q3 last year or $2 4 million of direct costs related to the one week labor conflicts.
Dubuque Center employee with our distribution center voice in Charlotte.
EBITDA for the quarter totaled $612 3 million up eight 4% year over year and represented nine 5% of sales versus nine 6% last year.
Total depreciation and amortization expense for the quarter was $159 $5 million versus $154 seven last year and a three 1% increase reflects the additional investments in supply chain logistics as well as in store technology.
In our third quarter, the income tax expense amounted to 69 million and represented an effective tax rate of 16, 6% compared with an income tax expense of $99 6 million and an effective tax rate of 26, 6% in the third quarter last year.
The company recorded tax assets of $40 7 million in the quarter and that's comprised of $8 2 million of current tax assets and $32 5 million of deferred tax assets.
With an equivalent reduction in the tax expense following a favorable judgment at the tax court of Canada capital losses previously disallowed by the Canada revenue agency on a disposition of shares of Rite aid by Google bureaucracy in the year 2012, 2014 have now been granted and the CRA subsequently accepted that the comp.
[laughter] amend our rollover form file for the tax year ended March three 2018 and that results in an increase in the tax base of intangible assets.
Adjusted net earnings were $314 8 million compared to $203 8 million last year, a 10, 9% increase in our adjusted net earnings per share amounted to $1 35.
Up 14, 4% versus last year's adjusted EPS of $1 18.
After three quarters in fiscal 'twenty, three capital expenditures amounted to $403 2 million versus $4 $45 8 million last year.
On the retail side, we opened five new stores. So far this year, one metro store in the province of Quebec to supersede and one food basics, while converting a metro to a superseding Gatineau. We also carried out a major renovation in seven stores, representing a net increase of 153000 square feet or <unk>, 7% of our food retail network.
Turning to our current normal course issuer bid program, we have repurchased between November 25, 2022, and July 28 of this year, a little over $6 2 million shares for a total consideration of $449 3 million, representing an average share price of $72 $23 a share.
That's it for me I'll turn it over to Eric.
Thank you Francois and good morning, everyone.
We delivered solid results in the third quarter fueled by strong same store sales and good operating leverage while food inflation remains stubbornly high our teams did an excellent job to offer good value to our customers in all of our vendors, resulting in market share gains for the network and tonnage and dollars driven by our discount.
Food stores.
For the quarter total sales grew by nine 6% EBITDA by eight 4% and adjusted EPS by 14, 4%.
Food same store sales were up nine 4% driven by the continuing shift to discount.
Our internal food basket inflation decelerated to 8% lower than the reported CPI and lower than in the previous quarter.
Traffic was up significantly while the average basket remained flat.
Promotional penetration remains high and private label sales continue to outpace national brands.
Our food gross margins came in lower than last year again this quarter as we continue to absorb a portion of the cost increases we incur.
In pharmacy, we delivered strong balanced performance, despite the expected decrease in cough and cold demand.
Pharmacy comparable sales were up five 9% on top of seven 2% in the third quarter last year.
Prescription sales were up six 7% driven by dispensing fee indexation growth and high cost therapies and professional services.
Commercial sales were up four 1%, primarily driven by cosmetics and health and beauty.
The two year stack is 12 seven percentage for prescription sales and 15, 2% for commercial products.
As you know the employees of at 27 of our Metro stores in the greater Toronto area have been on strike since July 29.
We are clearly disappointed given that we had worked constructively with the union and the employees bargaining committee to reach a very good agreement, providing significant pay increases that they unanimously recommended to the employees.
We remain committed to the bargaining process and look forward to a resolution and the reopening of our stores as soon as possible, while ensuring our long term competitiveness of our company.
We successfully launched our loyalty program in late May and early results are very encouraging with more than 1 million new members joining the program, which now has $2 2 million members and still growing across our five banners.
The swipe rate and all banners is healthy and overall customer response has been positive also we see a higher basket spend for more customers across all banners.
Our online food sales were up 99% versus last year, mostly driven by new partnership sales demand for our own online services has been stable and we continue to add capacity with more click and collect stores.
Turning to the modernization of our supply chain, we continue to see productivity improve in both our fresh phase one and frozen distribution centers in Toronto, We look forward to the launch of our state of the art fresh and frozen automated distribution center in <unk> north of Montreal in the coming weeks to serve.
Our Quebec stores.
As we begin our fourth quarter, we are seeing some moderation in food inflation.
Compared to last year, the number of price increase requests received from suppliers in Q3 are down about 40%.
Whoever the size of the increases remains higher than normal in the mid to high single digits.
That's on top of many double digit increases last year.
So we're tracking input costs and our teams are negotiating the best possible costs to minimize retail price inflation.
On the pharmacy side, we will be going up against tough comps in the next few quarters as we lap extraordinary demand and OTC medication in fiscal 'twenty, two ju two post COVID-19, cough and cold symptoms.
We are now back to more normal demand levels.
Finally, I want to take this opportunity to address comments that have been made in the media. Following the recent fleet by a bread supplier and the competition Bureau investigation that started in 2015 and also the recent launch of a new class action alleging price fixing in the meat category.
This class action has yet to be certified and we will vigorously oppose its certification.
Let me be clear, we have not participated in any price fixing agreement and we have not violated the competition Act.
Clients with the law and our code of conduct by all employees from top to bottom is fundamental at our company.
Allegations that the food industry is culture is such that these practices may be generalized or that the governance is somehow deficient or simply not true.
Damages the reputation of our company all of its employees and the industry and should stuff.
We take pride in our team our culture, our performance and our investments to better serve our customers and support our communities.
Thank you, we'll have we'll be happy to take your questions.
Thank you, Sir ladies and gentlemen, we will now begin the question answer session. If you'd like to ask a question. Please press star followed by the number one on your telephone keypad. If your question is we know Tony would like to withdraw from the queue. Please go ahead, Simon would like and number two.
Speaker phone lift your handset before pressing any Keith Allman. Please compile the roster. Your first question comes from Tami Chen with BMO capital markets. Please go ahead.
Hi, good morning, Thanks for the question.
First I just wanted to go back to the net.
The comp here.
I know, we're getting a better street, Matt here Blackjack implies a positive tonnage result wishes.
Quite positive.
Could you just talk a bit more about that I know in the press release, you called out market share gains, but anything more you could say about that strong performance would be helpful. Whether any specific factors that you would highlight can you talk a bit more about the positive impact your automated D C and Toronto.
We would have had whether it's better fill rates or better quality on the proteins.
Yeah.
So the general comment is we were very pleased with our performance on the food side across the business.
We're gaining share and doing really well on a relative basis overall within discount and within conventional so very pleased with the performance. It's a challenging operating environment inflation is tough people are searching for value in all of our stores on all of their trips and I think like I said, our merchandisers in our <unk>.
<unk> did a great job to deliver good value to our customers and that's reflected in the strong same store sales that we're reporting today.
The discount is a big driver of that growth the shift to discount continues its been ongoing and it still continues today, we're well positioned with our Super C and food basics and Thats, allowing us to records as some of these numbers and gaining tonnage so as as inflation moderates and starts to decelerate.
With the strong same store sales that we have yes. We are at we are gaining tonnage overall.
So I'm not going to point out one category you.
You pointed out the Dcs in Toronto for sure our in stock position with these new Dcs is better and that has contributed to some sales and some tonnage probably but I wouldnt point out that as the big driver. It's one factor amongst many there is a lot of factors at play strong execution.
Good merchandising in this tough.
Operating environment.
Okay, and what about on the promotional side in this quarter.
The year over year declining gross margin.
Where are you investing perhaps a bit more than typical in promotions to drive that tonnage that may have contributed to that.
Gross margin.
Promotional penetration is stable it is.
Pretty much back to pre pandemic levels, so I would call it stable and normal.
It's high but it's always been kind of income kind of at those levels.
Investing we're absorbing part of the cost increases.
We are facing.
<unk> been facing for over a year of significant cost increases there are limits to what we can charge to our customers. So yeah. It's reflected in a lower gross margin than food like we've been saying for a few quarters. It is a reality to be competitive and offer a good value to our customers.
Private label is growing strongly at a higher rate that that's helping.
But as we are.
As we grow discount sales as we are offering.
Offer good value to our customers that puts pressure on our gross margin in the environment, where we have all of these cost increases.
Right. Okay. That's it for me thank you.
Thank you.
Thank you. Your next question comes from Irene <unk> with RBC capital markets. Please go ahead.
Thanks, and good morning, everyone.
On the on the block.
I think you mentioned that you have 1 million new customers, which is fabulous.
Are you seeing in terms of the cross shop.
P J C metro and even sovereign debt and the redemption across both banners.
Yes, so very pleased with the sign up.
New members is ahead of our schedule. So very pleased with that I think the teams did a great media campaign. It was really a strong launch in Quebec.
And people are responding well across all of our vendors so.
I mean, it's a mutual win.
<unk> had the card before or so so it's a seamless for them, but we were signing up new customers or new members of junk suite supersede.
And then with also a little bit so so very positive early days for cross shopping all this analysis.
It will be done we are seeing some but I'm not going to draw big conclusions is still very very early days.
But the purpose of the program the coalition with within our company with our multiple banners.
Complementary high traffic and we're very confident that we're going to see more and more cross shop and cross redemption.
The more points into our into our stores. So a successful launch.
A lot of work ahead.
The RBC partnership is off to a good start too so we.
We will be monitoring monitoring those those results.
Going forward.
Okay. That's great. Thank you and then just thinking ahead to the opening of the DC here in Montreal.
Presumably as you're planning for the opening Youre, taking a lot of the learnings from Toronto.
How should we be thinking about sort of the phasing of it coming on stream.
And sort of any incremental costs or duplicative services that we should be keeping in mind.
So yes, so we.
We will start to ramp up.
Next month's sometime in September .
With the Cooldown starts next week and then we will start operations gradually in September . So we will we will transition product gradually over the next several months. So this is next year is going to be a transition year, where we operate the new DC and <unk> the old Dcs will still be operating as we transfer products. So.
Our intention is to finish our budgets do all our numbers and give you more guidance in November on what the impact of these cuts are going to be for next year, we're not ready to do that but there will be some that's for sure.
On their learnings clearly yes.
Several people from Keybank were involved in the in the DC launches in Toronto over the last couple of years. So.
A lot of learning that has taken place and that will be taken.
200, <unk> when we launched the center. So I think we're going to be in good shape, but it's going to be a transition year.
That's great. Thank you very much.
Thank you. Your next question comes from Michael <unk> with TD Cowen. Please go ahead.
Yeah, Hi, Thank you good quarter.
Question on the e-commerce side actually.
We have very strong growth and it seems like youre gaining share at least on the card platform. I'd assume is that is that accurate and what else do you think explains that jump in your growth rate overall in your ecommerce from 40% in the first half to almost 100% in this quarter.
So Michael like I said the growth is mostly substantially driven by the partnership so it's <unk>. It's <unk>. So we're as we're putting more banners and more stores and more regions on that platform. It's growing our sales number versus the previous quarter. So what's our share on Mr. Kurt I don't know.
But we our sales with those with those Mark marketplaces are growing.
Eric did you add over and shared in the last quarter or I thought that was added.
Later last year.
It was.
Yes.
We've been on we've been on Uber corner shop for a long time, we've added into their card over the last year. So we haven't done one full year, yet, but we're ramping up sites.
Sales are growing on those platforms.
Yes, it was more in Q3 than it was in Q2.
At some point, it's going to stabilize.
So so happy with that performance okay. So it is not.
You didn't actually see more.
Did you see actually I guess question is did you see more geographies added to the platform, let's call it over the last quarter.
To explain that jump.
Yes.
Yes, those marketplaces are opening up in more geographies, where we can serve the customers. So that's that's that's contributing to it for sure yes.
Our own.
Alright, alright.
I'm, just going to say our own servicer services online are pretty stable. So.
And for our own services has been pretty stable, but we've been growing share.
Total E comm share through these marketplaces and platforms.
Okay and as it grows I didn't hear your comment earlier.
It does the extra costs.
Partnership cost.
Does that affect your gross margin or your opex.
It's opex Michael.
We flagged as any in the MD&A. So we have more E com fees in the Opex versus last year. That's part of the reason why it's a little higher.
And are you willing to give us what your ecommerce penetration is now.
No.
Alright, thanks very much.
Thanks, Michael.
Thank you. Your next question comes from Vishal <unk> with National Bank. Please go ahead.
Hi, Thanks for taking my questions.
Sure.
Is it fair to say.
Say that your market share gains are accelerating quarter over quarter.
Yes, yes, you can say that.
Slightly yes.
And.
With respect to market share on the <unk> side and prescriptions are you seeing market share gains there as well.
Pretty stable.
On that side.
Okay and also related to market share Metro has been advancing many initiatives that you're a big supply chain initiatives extra loyalty offers.
And this has a direct customer facing benefits.
<unk> as a result of these initiatives are you able to isolate any improvement associated to your net promoter scores are are you seeing that improve and is that resulting in your market share gains.
Our NPS, we monitor NPS and customer satisfaction in all of our banners constant.
Constantly.
We're pleased with our overall numbers clearly in this high inflation environment and customers that are not super happy about pricing I think it's an industry.
The issue in the global issue so.
That's affecting our numbers a little bit but overall the rest of the metrics. We measure are trending positively overall, so we're pleased with our customer satisfaction performance.
Okay, and maybe just changing topics here.
The impact of a shrink.
Are you seeing that to like have you seen that magnifying or is it stabilizing and what is management doing to you that better control headline.
So.
And again in execution and operations issue at store level to control shrink.
And if you are referring to theft and all of that.
Shrink is also a function of merchandising and pricing and turnover in our stores. So overall, we're pleased with the with our shrink performance we're.
We're not seeing a huge spike in shrink.
Clearly there are issues with the self checkouts.
But there were issues before.
There are more organized networks too.
To steal from us and from other retailers. So we have to be very careful and with loss prevention, our franchisees store operators.
It's a constant effort to manage it.
No.
What we're doing it's an issue that we addressed like many others, but I can't point to that to say.
It's a huge issue.
Yes.
Okay. Thanks for your comments.
Thank you thanks, Joe.
Thank you. Your next question comes from Mark Petrie with CIBC. Please go ahead.
Hey, good morning, I just wanted to follow up on a couple of things actually so just on the food same store sales.
I know, there's always noise in the inflation versus same store sales growth calculation, especially with consumer behavior shifting so much but.
We are sort of lapping an outlier period last year, where the tonnage looked.
Weak relative to your normal sort of trend. So I'm, just curious to hear a bit more about this and how much of this result, do you think is sort of catch up from lapping something some noisy numbers last year versus something that could sustain and flow through through the results for the next couple of quarters.
If you were to hold the share from the share gains from here.
Well yeah.
Yes.
We were lapping a 1% same store sales or thereabouts last year in Q3, So I hear you.
Again the Covid.
Noise over the last few years is harder to analyze that way so.
We consistently look every week at our number versus pre Covid and how we're doing on a four year stacked basis, and we're very pleased with our performance.
Raul and discount shift if you look at it over four years is strong and again as I said in my opening statement, where we.
Well positioned with supersede and food basics.
No.
Very pleased with our current performance our market share gains.
The quarter last year reflected the quarter the year before so you have to be careful on the lapping there were not.
Uh huh.
Last year versus 2021 was not necessarily apples to apples, whereas this year 23 versus 22, it's pretty much apples to apples and we're pleased with our growth.
Okay. Okay I appreciate that.
And then.
Just also following up on the.
On the gross margin I think last quarter food was a little bit stronger supported by I think you've called out amongst other things the ramping DC efficiencies and so I just wanted to confirm you know those those efficiencies are continuing and probably even accelerating a little bit. So it was it was it was maybe just some near term volatility.
As opposed to any fundamental shifts in and sort of the <unk>.
<unk> from the D C is that fair.
That's fair Mark the efficiencies are still there.
Yes, okay.
And.
And sorry, just on them one to the other follow up is.
And how are the enrollment rates kind of performing now obviously, there's an initial surge when you launch have those started to plateau or are you still sort of seeing.
Initial kind of that initial surge is that continuing.
So yes for sure it is plateauing.
But it's still growing so the numbers are growing every week.
At a slower rate than they were in the first few weeks, but we're pleased we're pleased with the numbers, we're getting and we see continued.
<unk> opportunities and we will we will do everything we can to sign up as many people as we can.
Yes, yes, yes, no absolutely just trying to sort of gauge where youre at in terms of that progression and then I don't know if you can or willing to share anything with regards to.
The next steps with with regards to sort of deepening engagement with that program.
Okay.
Well next steps like I said.
We're rolling it out, but we have a strong.
Digital strategy to engage with our customers connect with their customers. So all of the personalization the connections the personalized rebates.
Cross shopping opportunities, that's all part of our loyalty Slash digital program and.
For obvious competitive reasons I'm not going to give you all the strategies, but it's clearly part of our program to drive sales and drive loyalty.
With our customers more and more of their spend within our stores.
But it's all four.
Okay I appreciate that congrats on the quarter and all the best.
<unk>.
Thank you. Your next question comes from Josh <unk> with Scotiabank. Please go ahead.
Yes, good morning, Congrats on a good quarter I just wanted to add.
Talk a little bit about the strong Rx comps in the quarter.
Thank you mentioned higher dispensing fees and other initiatives can you maybe help us understand what drove that.
What drove that 6% plus number and how should we how are volumes trending versus pre pandemic.
Yes, we're pleased with the Rx demand it is strong, especially considering that we were lapping some COVID-19.
Rx.
Sales are driven by COVID-19, including test in vaccines and that kind of stuff, which were basically nonexistent in this quarter. So we pointed out indexation fees. So the public drug program in Quebec.
Quebec Association, a pharmacist came to an agreement with the health industry.
They don't have the exact rate, but they bumped up the.
The prescription fee.
On all of the prescriptions so that has contributed.
Your cost therapies are growing.
That's also a contributing factor that I pointed out pharmacy services.
<unk>.
The medical action that the pharmacists are now allowed to do that that's growing.
It's a growing portion of our Rx sales so.
Which is very encouraging so pleased with our performance could sue the brunet together.
We are number one leading share in Quebec for prescriptions, and it's holding really well even.
And as we cycled the Covid stuff, so very pleased with our performance and our market share.
Okay, Thanks, and just maybe moving to the front end of the pharmacy.
We're coming off a pretty strong record season last year.
Just wondering if there is a potential for maybe the comps to be flat to negative over the next few quarters, maybe if the if a beauty product side doesn't really slow down a little bit given kind of the macro out there just your view maybe on how are you.
You see that potentially evolving.
Yeah. So so we will be lapping.
We did lap this quarter strong front end sales, we will do the same over the next couple of quarters last year. These front end sales were driven very much by OTC.
Cough and cold symptoms post Covid were high so that drove a lot of traffic and sales in our stores OTC and others. So we.
We're seeing like I said in my opening statement more normal levels of demand in that regard now. So you can expect a lower for sure a lower comp at the front end.
In pharmacy.
And the next quarter and maybe the following quarter, so OTC demand as our.
Down a bit right now.
Health and beauty cosmetics trending up continuing to trend up but overall.
The cycling of that exceptional OTC sale last year is a tough lap and.
You'll just have to we will have to look at market share because.
We're not going to repeat that.
Okay. That's helpful. I want to talk a little bit about SG&A, maybe francois the rates up quite a bit mid single digits I think mid to high single digits versus kind of.
Last quarter.
Should we think about run rate maybe.
Over the next few quarters and its ability to maybe.
No.
He has hired a sales.
Just wondering how you think about that.
The VAT rate and the deleveraging over the next couple of quarters.
Yeah. So obviously there is a link to sales obviously your sales grow your SG&A growth as well not theres a portion of the fixed portion of variable. So it's I think you have to look at the increase versus the topline growth. So Q1 was up $4 two year over year Q2 was up $4 nine now it's eight with a $9 six topline growth. So it's still <unk>.
Quite in line when you adjust for the launch costs of <unk> and the strike cost last year that increase is seven 6% year over year, and it's 10% of sales versus 10, 2% of sales last year. So it's trending in the right direction.
And I'm not we didnt give the amount of the E comm fees, but if you take that into account because there are much higher than they were last year. Obviously is as Eric mentioned, then we're below 7% increase year over year. So on the top line growth of nine six I'm very I'm very okay with that but obviously its an area that we focus on.
We've got to make sure that this this this SG&A remains.
In line with the top line growth. So so far we've done that in three quarters and Thats, what we will focus on going forward.
Okay. Just one last one if I may just where are we exactly maybe on the journey.
For conversions to discounting tobacco is that something that will continue maybe next year as well and the year after that.
Can you maybe.
Any sense, you can give us maybe where we are there.
So.
Yes, we always said, we manage market by market store by store what is the best format for each market at the right time. So we've converted a couple of stores last year, we probably will convert a couple of stores next year.
Yes.
This is a real move.
The magnitude of the magnitude we're talking about so we don't have a wholesale program here to convert a ton of stores to discount.
Clearly there is a shift in the market and we want it we want to capture it but we had strong metro stores.
Those that are more apt for a discount conversion, we we will manage closely and monitor and convert it at the right time, if it's the right decision market by market. So we have a few potential conversions, but it's not a huge a huge program.
Okay. Thanks for your answers.
Thank you. Thank you.
Your next question comes from Chris Li with Desert That'll. Please go ahead.
Good morning, everyone Hi, Eric.
When you look at the percentage of food customers that are omnichannel.
Have you seen a notable increase for you guys given that I think you mentioned that.
Let me channel basket size is about three times the single channel customer I'm wondering if that's also one of the reasons you are seeing such a strong growth in <unk> food sales.
It's one of many reasons, but yes, the we have more and more multichannel.
Shoppers are shopping our stores and online.
At different times for different purposes, and that's a growing number and we're growing our share of wallet share of stomach with these cameras and share of wallet. So that's a big driver of our strategy to offer.
Customers to shop.
Our stores or online the way they want when they want so we have the same price the same promotion online and in store and I think that's a.
Thats an attraction.
Making some gains for us.
Okay. Thanks for that and I apologize if you mentioned this already but are you able to share with us.
How did this food same store sales people during the quarter or did it accelerate through the quarter or was it.
Watch the stable or stable rates with growth.
I don't think it would be wise to give you too much detail, but we're very pleased with the performance it was pretty strong throughout the quarter.
I'll just leave it at that.
And is it fair to infer from your comments that the performance in both with basic supersede Super Bowl more or less equally strong it wasn't one better than the other necessarily.
We don't.
Point outperformance by by banner, specifically or by Province specifics.
Olive discount did well.
<unk> pleased with our metro stores on a relative basis in their respective markets.
We're holding and growing.
But the discount was it was the biggest driver and I'm not going to disaggregate between the two discount vendors.
Okay, and just lastly.
Just anything on the drug reform side that Youre monitoring.
Yes, we are monitoring.
<unk>.
No.
On the branded on the branded drugs, we're still we're still waiting for the Pn BBB them.
Always get that acronym wrong.
T whatever.
What I mean, so we're still waiting for.
Thank you.
And on the generic side.
There is no agreement yet, but we understand that negotiations are progressing well hopefully they'll get to a resolution soon so we have no news to report.
No new news to report.
Okay, perfect and have a good rest of the summer guys. Thank you.
Thank you Chris.
Thank you there are no further questions at this time you May proceed.
Thank you all for your interest in Metro and we will speak again soon to discuss our fourth quarter results on November 15th Thank you.
Ladies and gentlemen, this concludes your conference call for today, we thank you for participating and ask that you. Please disconnect your lines have a great day.
Okay.