METRO REPORTS 2025 THIRD QUARTER RESULTS

Executive Summary

• METRO INC. reported strong financial results for the third quarter of Fiscal 2025 (ended July 5, 2025), with net earnings increasing 9.0% to $323.0 million and adjusted net earnings rising 8.8% to $331.8 million.
• The company demonstrated robust top-line growth, with total sales reaching $6,871.0 million (up 3.3% year-over-year), driven by solid comparable sales growth in both food (+1.9%) and pharmacy (+5.5%) segments.
• Management highlighted successful execution of store expansion plans, opening five new food stores in the quarter, while maintaining gross margins at 19.8% through productivity gains and reduced shrink.

Key Details

• Q3 Fiscal 2025 Financial Performance (16 weeks):
  • Sales: $6,871.0 million (up 3.3% from $6,651.8 million in Q3 2024).
  • Net Earnings: $323.0 million (up 9.0% from $296.2 million); Fully diluted EPS of $1.48 (up 13.0%).
  • Adjusted Net Earnings: $331.8 million (up 8.8% from $305.0 million); Adjusted fully diluted EPS of $1.52 (up 12.6%).
  • Operating Income (EBITDA proxy): $655.7 million (up 5.7% from $620.2 million), representing 9.5% of sales.
• Year-to-Date Performance (40 weeks):
  • Sales: $16,898.0 million (up 3.8% from $16,281.5 million).
  • Net Earnings: $802.5 million (up 12.7% from $711.8 million); Fully diluted EPS of $3.63 (up 16.0%).
  • Adjusted Net Earnings: $803.8 million (up 7.7% from $746.4 million); Adjusted fully diluted EPS of $3.64 (up 11.0%).
  • Operating Income: $1,598.2 million (up 4.6% from $1,527.4 million).
• Same-Store Sales & Operational Metrics:
  • Food Same-Store Sales: Up 1.9% (vs. 2.4% in Q3 2024).
  • Online Food Sales: Up 14.4% (vs. 34.3% in Q3 2024).
  • Pharmacy Same-Store Sales: Up 5.5% (vs. 5.2% in Q3 2024), driven by a 6.2% increase in prescription drugs and a 4.0% increase in front-store sales (OTC, cosmetics, health/beauty).
  • Gross Margin: 19.8% for Q3 2025 (vs. 19.6% in Q3 2024), attributed to distribution center productivity and reduced shrink.
  • Operating Expenses: 10.2% of sales in Q3 2025 (flat vs. prior year).
• Costs and Taxes:
  • Depreciation & Amortization: $184.9 million in Q3 2025 (up from $174.0 million), driven by supply chain investments and automation technology.
  • Net Financial Costs: $45.3 million in Q3 2025 (down from $46.6 million), due to lower interest expense on net debt.
  • Effective Tax Rate: 24.1% in Q3 2025 (down from 25.9%), primarily due to a provincial tax holiday related to the new automated distribution center in Terrebonne.
• Adjustments to Net Earnings:
  • Q3 2025: Adjustment of $8.8 million for amortization of intangible assets from the Jean Coutu Group acquisition.
  • YTD 2025: Includes $21.9 million for Jean Coutu intangible amortization and a favorable tax adjustment of $20.6 million for prior years.
• Capital Allocation & Dividends:
  • Share Repurchases: Under the Normal Course Issuer Bid (NCIB), the company repurchased 5,700,000 common shares between Nov 27, 2024, and Aug 1, 2025, at an average price of $98.55, totaling $561.8 million.
  • Dividend: Board declared a quarterly dividend of $0.37 per share on Aug 12, 2025.
• Strategic Updates:
  • Opened 5 new food stores in Q3 2025, with continued acceleration planned for Q4.
  • Focus shifting from supply chain modernization investments to realizing efficiency gains.

Notable Quotes

• "We are pleased with our results in the third quarter, marked by solid comparable sales growth in food and pharmacy, and good cost control. We successfully opened 5 new food stores in the quarter, a pace that will continue in the fourth quarter, on track with our plan to accelerate the development of our growing discount banners. We are confident that our sustained investments in our retail network and supply chain combined with strong execution will continue to fuel our growth and create long-term shareholder value." — Eric La Flèche, President and Chief Executive Officer