METRO REPORTS 2026 SECOND QUARTER RESULTS

• Metro Inc. reported second quarter fiscal 2026 results on April 22, 2026.
• Sales increased 4.1% year-over-year to $5.113 billion.
• Net earnings rose 12.1% to $246.6 million, driven partly by a $20.4 million gain from asset disposals (primarily out-of-service warehouses).
• Adjusted net earnings increased only 4.4% to $236.5 million, indicating the headline growth is partially inflated by one-time gains.
• Fully diluted EPS grew 17.2% to $1.16; Adjusted fully diluted EPS grew 8.8% to $1.11.
• Food same-store sales slowed to 1.8% compared to 5.3% in the prior year quarter.
• Pharmacy same-store sales grew 5.1%, though this is a deceleration from 7.0% in Q2 2025.
• Online food sales surged 19.8%.
• Operating income before D&A increased 10.3% to $508.6 million.
• Gross margin improved slightly to 20.1% from prior year levels.
• The company repurchased $222.5 million in shares during the quarter (average price $96.47).
• A strike at the Laval produce distribution center began March 30, 2026; management expects this to impact Q3 results despite contingency plans.

• The headline earnings growth of 12.1% appears strong but is materially supported by a $20.4 million non-recurring gain on asset disposals. Without this, adjusted earnings growth was a modest 4.4%.
• Food same-store sales deceleration (5.3% to 1.8%) suggests consumer pressure or competitive intensity in the core grocery segment is increasing.
• The strike at the Laval distribution center, announced March 30, is a known negative catalyst that was already priced into the stock prior to this earnings release. This news confirms the impact will shift to Q3 rather than being absorbed entirely in Q2.
• Share repurchases ($222.5M) demonstrate capital return commitment but also indicate management sees value at current levels or wishes to support EPS.
• Overall, the results confirm operational resilience following the Toronto freezer shutdown issues of late 2025, but do not signal a fundamental acceleration in growth that would warrant a "Material - Positive" upgrade given the looming Q3 strike costs.

• Metro Inc. is a leading food and pharmacy retailer in Canada, operating primarily in Quebec and Ontario under banners such as Metro, Jean Coutu, and Food Basics.
• Flagship Project: The company focuses on store expansion (discount network) and supply chain automation. Recent initiatives include the commissioning of new automated distribution centers to improve efficiency.
• Development Status: The company is recovering from operational disruptions at its Toronto frozen-food distribution center (resolved Nov 2025) but faces new labor challenges in Quebec (Laval strike).