MONTRÉAL, Aug. 12, 2026 /CNW/ -- METRO INC. (TSX: MRU) today announced its results for the third quarter of Fiscal 2026 ended July 4, 2026.
2026 THIRD QUARTER HIGHLIGHTS
- Sales of $6,970.4 million, up 1.4%
- Food same-store sales(1) down 1.5%
- Pharmacy same-store sales(1) up 4.8%
- Net earnings of $211.3 million, down 34.6% and adjusted net earnings(1) of $262.6 million, down 20.9%
- Fully diluted net earnings per share of $1.00, down 32.4% and adjusted fully diluted net earnings per share(1) of $1.24, down 18.4%
- Estimated lost profit and direct cost impact of the ongoing labour conflict at our produce distribution centre in Laval of $66 million after-tax or $0.32 per share (results are not adjusted for this impact)
- Retail and distribution network non-recurring restructuring expenses and impairment of assets totaling $42.6 million after-tax ($0.20 per share) expected to generate recurring annual net earnings improvement of approximately $15 million ($0.07 per share) by the end of Fiscal 2028(2) (results are adjusted for these charges)
- Returned $154.1 million to shareholders through share repurchases
- Opened five stores in the quarter
16 weeks / Fiscal Year | ||||||
(Millions of dollars, except for net earnings per share) | 2026 | % | 2025 | % | Change (%) | |
Sales | 6,970.4 | 100.0 | 6,871.0 | 100.0 | 1.4 | |
Operating income before depreciation, amortization and impairment of assets | 555.7 | 8.0 | 655.7 | 9.5 | (15.3) | |
Net earnings | 211.3 | 3.0 | 323.0 | 4.7 | (34.6) | |
Fully diluted net earnings per share | 1.00 | -- | 1.48 | -- | (32.4) | |
Adjusted net earnings(1) | 262.6 | 3.8 | 331.8 | 4.8 | (20.9) | |
Adjusted fully diluted net earnings per share(1) | 1.24 | -- | 1.52 | -- | (18.4) | |
40 weeks / Fiscal Year | ||||||
(Millions of dollars, except for net earnings per share) | 2026 | % | 2025 | % | Change (%) | |
Sales | 17,369.2 | 100.0 | 16,898.0 | 100.0 | 2.8 | |
Operating income before depreciation, amortization and impairment of assets | 1,546.9 | 8.9 | 1,598.2 | 9.5 | (3.2) | |
Net earnings | 684.2 | 3.9 | 802.5 | 4.7 | (14.7) | |
Fully diluted net earnings per share | 3.21 | -- | 3.63 | -- | (11.6) | |
Adjusted net earnings(1) | 747.8 | 4.3 | 803.8 | 4.8 | (7.0) | |
Adjusted fully diluted net earnings per share(1) | 3.51 | -- | 3.64 | -- | (3.6) | |
PRESIDENT'S MESSAGE
"Our third quarter results were significantly impacted by the ongoing labour conflict at our produce distribution centre in Laval. We continue to execute our contingency plan and our Quebec stores are generally well stocked. I want to thank our teams for their outstanding resilience and their relentless focus to deliver the best possible shopping experience to our customers during this challenging period. We remain committed to reaching a negotiated agreement that recognizes the contribution of our employees. As much as the strike is having a significant temporary impact, we must preserve the long-term competitiveness of our operations and our ability to continue serving our customers effectively in a competitive market. We will not compromise on this objective. While our food business continues to face this headwind in the fourth quarter, we are pleased with the continued strength of our pharmacy business and with our discount acceleration plan which is on track and delivering good results.
As previously announced, I will retire as CEO at the end of this fiscal year and become Chairman of the Board. It has been an honor and a privilege to lead METRO and to work alongside such talented and dedicated teams across our stores, distribution centres and offices. Alongside my Board colleagues, I look forward to METRO's continued success under Marc Giroux's leadership and I am confident that the company will continue to deliver long-term value to customers, employees and shareholders(2) ", declared Eric La Flèche, President and Chief Executive Officer.
OPERATING RESULTS
SALES
Sales in the third quarter of Fiscal 2026 ended on July 4, 2026 were $6,970.4 million, up 1.4% versus the third quarter of the prior year which ended on July 5, 2025. Sales were positively impacted by new store openings, but were unfavorably impacted by the ongoing labour conflict at our produce distribution centre in Laval and its consequences on our food retail network in Quebec.
Food same-store sales(1) were down 1.5% in the third quarter of Fiscal 2026 (2025 -- up 1.9%). Online food sales(1) were up 16.3% versus last year (2025 -- 14.4%). Our food basket inflation was in line with the reported CPI of 3.9% for food purchased from stores. Pharmacy same-store sales(1) were up 4.8% (2025 -- 5.5%), with a 6.4% increase in prescription drugs(1) and a 1.4% increase in front-store sales(1), primarily driven by cosmetics and health and beauty.
Sales in the first 40 weeks of Fiscal 2026 totalled $17,369.2 million, up 2.8% compared to $16,898.0 million for the corresponding period of 2025.
OPERATING INCOME BEFORE DEPRECIATION, AMORTIZATION AND IMPAIRMENT OF ASSETS
This earnings measurement excludes financial costs, taxes, depreciation, amortization and impairment of assets.
Gross margin(1) for the third quarter and the first 40 weeks of Fiscal 2026 were 18.8% and 19.4% respectively versus 19.8% for the corresponding periods of 2025. Gross profit for the third quarter of 2026 was unfavorably impacted by $87 million of estimated lost profit and direct costs related to a labour conflict at our produce distribution centre in Laval.
Operating expenses as a percentage of sales for the third quarter of Fiscal 2026 were 10.4% versus 10.2% for the corresponding quarter of 2025. The third quarter of 2026 included $3 million of direct costs related to the labour conflict at our produce distribution centre in Laval. For the first 40 weeks of Fiscal 2026, operating expenses as a percentage of sales were 10.5% versus 10.4% for the corresponding period of 2025.
As part of our continued efforts to address our customers' ongoing search for value and to strengthen our competitive position in targeted markets, we are proceeding with a reorganization of our Ontario store and distribution network which will result in the conversion of 10 Metro stores to the Food Basics discount banner, the closure of one store and the closure of a satellite warehouse. In addition, we will close our dedicated e-commerce fulfillment centre in Montreal and leverage our store network for the expansion of our delivery offering while reducing our cost structure. This transition addresses evolving customer expectations for greater flexibility and immediacy in online grocery and supports the long-term profitability of our e-commerce operations. The restructuring is expected to be completed by the end of fiscal 2027 and generate an estimated $15 million of recurring annual net earnings by the end of Fiscal 2028(2). As a result of these initiatives, restructuring expenses of $25.7 million were recorded in the quarter. The restructuring expenses consisted primarily of employee termination benefits, restoration and site closure costs, and lease-related costs associated with vacated facilities.
The asset disposals recognized in the third quarter of 2026 generated losses of $2.1 million. In the third quarter of 2025, asset disposals generated gains of $0.4 million.
Operating income before depreciation, amortization and impairment of assets for the third quarter of Fiscal 2026 totalled $555.7 million, or 8.0% of sales, a decrease of 15.3% versus the corresponding quarter of Fiscal 2025. Excluding the non-recurring restructuring expenses, operating income before depreciation, amortization and impairment of assets as a percentage of sales would be 8.3%, a decrease of 11.3% from the prior year. Management estimates that the labour conflict at our produce distribution centre in Laval negatively impacted the third quarter results by $90 million(2). This figure is based on estimated lost sales and associated estimated lost margins, realized inventory losses and incremental direct costs including third party logistics and security services. Operating income before depreciation, amortization and impairment of assets for the first 40 weeks of Fiscal 2026 totalled $1,546.9 million, or 8.9% of sales, down 3.2% versus the corresponding period of 2025.
DEPRECIATION AND AMORTIZATION
Total depreciation and amortization expense for the third quarter of Fiscal 2026 was $193.6 million versus $184.9 million for the corresponding quarter of 2025. The increase in depreciation and amortization expense is mainly due to the increase in the retail network investments, including right-of-use assets, and technology investments. For the first 40 weeks of Fiscal 2026, total depreciation and amortization expense was $481.5 million versus $454.6 million for the corresponding period of 2025.
IMPAIRMENT OF ASSETS
As a result of the initiatives outlined above which led to restructuring expenses of $25.7 million, the Corporation also recognized impairment of assets of $32.1 million during the quarter. The impairment of assets related primarily to property and equipment, right-of-use assets, and leasehold improvements affected by the decision.
NET FINANCIAL COSTS
Net financial costs for the third quarter of Fiscal 2026 were $50.5 million compared with $45.3 million in the corresponding quarter of 2025. The increase in net financial costs is mainly due to higher interest expense on net debt. For the first 40 weeks of Fiscal 2026, net financial costs were $125.1 million compared with $109.4 million for the corresponding period of 2025. The increase in net financial costs is mainly due to the recording in 2025 of interest receivable of $4.2 million regarding the resolution of a tax position related to prior years, and higher interest expense on net debt.
INCOME TAXES
The income tax expense of $68.2 million for the third quarter of Fiscal 2026 represented an effective tax rate of 24.4% compared with an income tax expense of $102.5 million and an effective tax rate of 24.1% for the third quarter of Fiscal 2025.
The 40-week period income tax expense of $224.0 million for Fiscal 2026 and $231.7 million for Fiscal 2025 represented effective tax rates of 24.7% and 22.4% respectively. The increase in the effective tax rate in 2026 is mainly attributable to a provincial tax holiday on a large investment project of $16.1 million for the first 40 weeks of Fiscal 2026 compared with $20.2 million for the corresponding period of 2025. The first quarter of 2025 also included a favourable $20.6 million income tax adjustment in respect of prior years.
NET EARNINGS AND ADJUSTED NET EARNINGS(1)
Net earnings for the third quarter of Fiscal 2026 were $211.3 million compared with $323.0 million for the corresponding quarter of 2025, while fully diluted net earnings per share were $1.00 compared with $1.48 in 2025, down 34.6% and 32.4% respectively. Excluding the specific items shown in the table below, adjusted net earnings(1) for the third quarter of Fiscal 2026 totalled $262.6 million compared with $331.8 million for the corresponding quarter of 2025, and adjusted fully diluted net earnings per share(1) for the third quarter of Fiscal 2026 were $1.24, versus $1.52 in 2025, down 20.9% and 18.4% respectively. Net earnings were not adjusted for the labour conflict at our produce distribution centre in Laval which had an estimated unfavorable impact of $66 million after-tax or $0.32 per share.
Net earnings for the first 40 weeks of Fiscal 2026 were $684.2 million compared with $802.5 million for the corresponding period of 2025, while fully diluted net earnings per share were $3.21 compared with $3.63 in 2025, down 14.7% and 11.6% respectively. Excluding the specific items shown in the table below, adjusted net earnings(1) for the first 40 weeks of Fiscal 2026 totalled $747.8 million compared with $803.8 million for the corresponding period of 2025, and adjusted fully diluted net earnings per share(1) were $3.51 in 2026 versus $3.64 in 2025, down 7.0% and 3.6% respectively.
Net earnings and fully diluted net earnings per share (EPS) adjustments(1)
16 weeks / Fiscal Year | ||||||||
Net earnings | Fully diluted | Net earnings | Fully diluted | Net earnings | Fully | |||
Per financial statements | 211.3 | 1.00 | 323.0 | 1.48 | (34.6) | (32.4) | ||
Retail and distribution network restructuring expenses, net of taxes of $6.8 | 18.9 | -- | ||||||
Retail and distribution impairment of assets, net of taxes of $8.4 | 23.7 | -- | ||||||
Amortization of intangible assets acquired in connection with the Jean Coutu Group | 8.7 | 8.8 | ||||||
Adjusted measures(1) | 262.6 | 1.24 | 331.8 | 1.52 | (20.9) | (18.4) | ||
40 weeks / Fiscal Year | ||||||||
Net earnings | Fully diluted | Net earnings | Fully diluted (Dollars) | Net earnings | Fully | |||
Per financial statements | 684.2 | 3.21 | 802.5 | 3.63 | (14.7) | (11.6) | ||
Retail and distribution network restructuring expenses, net of taxes of $6.8 | 18.9 | -- | ||||||
Retail and distribution impairment of assets, net of taxes of $8.4 | 23.7 | -- | ||||||
Gain on the disposal of out-of-service warehouses, net of taxes of $3.4 | (16.7) | -- | ||||||
Direct costs due to the freezer issue, net of taxes of $5.7 | 15.9 | -- | ||||||
Amortization of intangible assets acquired in connection with the Jean Coutu Group | 21.8 | 21.9 | ||||||
Favourable resolution of a tax position in respect of prior years | -- | (20.6) | ||||||
Adjusted measures(1) | 747.8 | 3.51 | 803.8 | 3.64 | (7.0) | $ (3.6) | ||
NORMAL COURSE ISSUER BID PROGRAM
Under the current normal course issuer bid program, the Corporation may repurchase up to 10,000,000 of its Common Shares between November 27, 2025 and November 26, 2026. As at July 31, 2026, the Corporation has repurchased 4,897,300 Common Shares at an average price of $94.56, for a total consideration of $463.1 million.
DIVIDENDS
On August 11, 2026, the Board of Directors declared a quarterly dividend of $0.4075 per share, the same amount declared last quarter.
EVENTS AFTER THE REPORTING PERIOD
On July 16, 2026, the Corporation announced that its subsidiary, Première Moisson Group Inc., entered into an asset sale agreement with FGF Brands for a total consideration of $90.0 million, which includes $15.0 million for a related supply agreement, pursuant to which FGF Brands will acquire Première Moisson Group Inc.'s commercial bakery manufacturing facility located in Baie-D'Urfé. Première Moisson Group Inc. will retain ownership of the Première Moisson brand, its retail bakery network and its French pastry production facility located in Vaudreuil-Dorion. The transaction is subject to customary closing conditions and is expected to close during the fourth quarter of fiscal 2026.
As at July 4, 2026, the carrying amount of the net assets expected to be transferred pursuant to the transaction was approximately $58 million, consisting primarily of property, plant and equipment. Upon closing of the transaction, the Corporation expects to derecognize the related assets and recognize a gain on disposal. The final gain on disposal will be determined based on the carrying values of the assets and liabilities transferred and other closing adjustments at the transaction date.
FORWARD-LOOKING INFORMATION
We have used, throughout this report, different statements that could, within the context of regulations issued by the Canadian Securities Administrators, be construed as being forward-looking information. In general, any statement contained herein that does not constitute a historical fact may be deemed a forward-looking statement. Expressions such as "expect", "look forward", "continue" and other similar expressions are generally indicative of forward-looking statements. The forward-looking statements contained herein are based upon certain assumptions regarding the Canadian food and pharmaceutical industries, the general economy, our annual budget, as well as our 2026 action plan.
These forward-looking statements do not provide any guarantees as to the future performance of the Corporation and are subject to potential risks, known and unknown, as well as uncertainties that could cause the outcome to differ significantly. 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 and discussed under the "Risk Management" section in our Annual Report 2025.
We believe these statements to be reasonable and pertinent as at the date of publication of this report and represent our expectations. The Corporation does not intend to update any forward-looking statement contained herein, except as required by applicable law.
NON-GAAP AND OTHER FINANCIAL MEASUREMENTS
In addition to the International Financial Reporting Standards (IFRS) measurements provided, we have included certain non-GAAP and other financial measurements. These measurements are presented for information purposes only. They do not have a standardized meaning prescribed by IFRS and therefore may not be comparable to similar measurements presented by other public companies.
National Instrument 52-112 Non-GAAP and Other Financial Measures Disclosure sets out specific disclosure requirements for non-GAAP financial measures, non-GAAP ratios, and other financial measures, which are capital management measures, supplementary financial measures, and total of segments measures, as defined in the Instrument (together the "specified financial measures").
The specified financial measures we disclose in our documents made available to the public are presented by measurement categories below.
NON-GAAP FINANCIAL MEASURES
Adjusted earnings before net financial costs and income taxes is a non-GAAP financial measurement that, with respect to its composition, is adjusted to exclude net financial costs and special items from the composition of the most directly comparable financial measure disclosed in our consolidated financial statements, which is earnings before income taxes. Special items may include acquisition and restructuring charges, gains or losses on the disposal of investments, and amortization and impairment losses of intangible assets resulting from a business acquisition.
Adjusted net earnings is a non-GAAP financial measurement that, with respect to its composition, is adjusted to exclude special items from the composition of the most directly comparable financial measure disclosed in our consolidated financial statements, which is net earnings. Special items may include acquisition and restructuring charges, gains or losses on the disposal of investments, amortization and impairment losses of intangible assets resulting from a business acquisition, and significant prior-year tax adjustments.
For measurements depicting financial performance, we believe that presenting earnings adjusted for these items, which are not necessarily reflective of the Corporation's performance, leaves readers of financial statements better informed thus enabling them to better perform trend analysis, evaluate the Corporation's financial performance and assess its future outlook. Adjusting for these items does not imply that they are non-recurring.
NON-GAAP RATIOS
Adjusted fully diluted net earnings per share is a non-GAAP ratio in which a non-GAAP financial measure is used as one or more of its components. The non-GAAP component used is adjusted net earnings(1). Adjusted fully diluted net earnings per share is calculated by dividing the adjusted net earnings(1) attributable to equity holders of the parent by the weighted average number of Common Shares outstanding during the year, adjusted to reflect all potential dilutive shares.
We believe that presenting this ratio, in which a non-GAAP financial measurement is used as one or more of its components, leaves readers of financial statements better informed as to the current period and corresponding prior year's period's performance, thus enabling them to better perform trend analysis, evaluate the Corporation's financial performance and assess its future outlook. Adjusting for these items does not imply that they are non-recurring.
SUPPLEMENTARY FINANCIAL MEASURES
The supplementary financial measures listed below are, or are intended to be, disclosed on a periodic basis to depict the historical or expected future financial performance, financial position or cash flow of the Corporation.
Food same-store sales are defined as comparable retail sales of stores with more than 52 consecutive weeks of operations, including relocated, expanded and renovated locations. Food same-store sales is a measure based on all stores in our network, including those whose sales are not included in the Corporation's consolidated financial statements.
Online food sales are the sum of sales made from all our online channels.
Pharmacy same-store sales (including total, front-store and prescription drugs) are defined as comparable retail sales of stores with more than 52 consecutive weeks of operations, including relocated, expanded and renovated locations. Pharmacy same-store sales do not form part of the Corporation's consolidated financial statements because the pharmacies are held by pharmacist owners.
Gross margin ratio is calculated by dividing gross profit by sales.
OUTLOOK(2)
The strike at our produce distribution centre in Laval is ongoing. After four weeks in the fourth quarter, our food same-store sales(1) are down 1.5%. Given that we do not have a clear resolution timeline for this conflict, we expect that our fourth quarter results will continue to be significantly impacted.
Separately, the restructuring program initiated in the quarter is expected to generate recurring annualized net earnings improvement of approximately $15 million (or $0.07 per share) by the end of fiscal 2028, with about half of the benefits expected to be realized by the end of fiscal 2027. We remain focused on driving growth through the continued expansion of our discount banners with the planned opening of about a dozen new or converted stores in this fiscal year, the conversion of an additional 10 stores announced today as well as the already planned new discount stores opening in fiscal 2027.
Finally, we are confident that we will continue to provide value to our customers and deliver long-term shareholder value through our effective merchandising programs, strong private labels, our Moi program and a consistent execution at store level.
CONFERENCE CALL
Financial analysts and institutional investors are invited to participate in a conference call for the 2026 third quarter results at 9:00 a.m. (EDT) today, August 12, 2026. To access the conference call, please dial 1 (800) 990-4777. The media and investing public may access this conference via a listen mode only.
Notice to readers: METRO INC. third quarter of 2026 interim condensed consolidated financial statements and management's discussion and analysis are available on the Internet at www.corpo.metro.ca - Corporate Site - Investors - 2026 Quarterly Results - 2026 Third Quarter Results.
SOURCE METRO INC.
Information: Nicolas Amyot, Executive Vice-President, Chief Financial Officer and Treasurer, Tel.: (514) 643-1003; Investor Relations, Department: Tel.:(514) 643-1000, www.corpo.metro.ca
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