Metro posts Q1 sales growth, raises dividend despite Toronto distribution-centre shutdown
Metro reported Q1 sales of $5.3 billion and raised its quarterly dividend, but a nearly two-month shutdown of a Toronto frozen-food distribution centre trimmed profits amid persistent food inflation.
Copy link
By Torontoer Staff
Metro Inc. reported first-quarter sales of $5.3 billion, a 3.3 per cent increase from the same quarter a year earlier, and announced a 10.1 per cent rise to its quarterly dividend. The Montreal-based grocer said those gains came despite a nearly two-month shutdown of its frozen-food distribution centre in Toronto and ongoing food inflation that created a challenging operating environment.
The company moved to reassure investors by highlighting growth in same-store sales, online orders and a programme of discount store openings, while acknowledging the outage in Toronto had a measurable impact on earnings.
Earnings and the Toronto freezer shutdown
Metro reported net earnings of $226.3 million, a 12.8 per cent decline from $259.5 million in the prior-year quarter, and fully diluted net earnings per share of $1.05 versus $1.16. The temporary closure of the frozen-food distribution centre, which began in September, led to lost product, repair costs and added expenses for storing and rerouting inventory. Those costs totalled $15.9 million after tax in the first quarter.
After accounting for the closure and other adjustments, Metro’s adjusted net earnings rose 1.3 per cent to $248.7 million. The company said online grocery sales continued to gain traction, increasing 25.8 per cent in the quarter.
- Total Q1 sales: $5.3 billion, up 3.3 per cent year over year
- Net earnings: $226.3 million, down 12.8 per cent
- Adjusted net earnings: $248.7 million, up 1.3 per cent
- Online sales growth: 25.8 per cent
- Dividend increase: 10.1 per cent, to about 4.1 cents per share
Same-store sales, drugstores and holiday timing
Same-store sales rose 1.6 per cent at Metro’s grocery banners and 3.9 per cent at Jean Coutu drugstores. Metro said the quarter was affected by a shift in the timing of the holiday shopping period, with one fewer busy day falling in the first quarter compared with the previous year. Adjusting for that timing, the company said same-store grocery sales would have risen 1.9 per cent.
Food inflation and government support
Food prices have been a persistent pressure for households and retailers. Statistics Canada’s consumer price index for food purchased from stores rose by about 5 per cent on an annual basis in December, nearly double the rate of general inflation, and followed a 4.7 per cent increase in November. Factors cited by industry and economists include extreme weather, higher transportation and labour costs, and international disruptions that affect supply chains.
Metro said its internal food-basket metric for the quarter rose more slowly than Statistics Canada’s food CPI. The company noted that its own basket tracks prices for items commonly purchased at its stores and is not directly comparable with the official CPI measure.
The federal government has announced an expansion of the GST credit, renamed the Canada Groceries and Essentials Benefit, to provide added support to lower- and moderate-income households dealing with higher grocery costs.
Strategy: discount stores and market share
Metro has continued to open new discount-format stores and convert some existing locations to lower-price models. The company said those moves, along with promotions and pricing decisions, contributed to market-share gains in a competitive grocery sector as shoppers seek lower-cost options.
We delivered sales and earnings per share growth in a challenging operating environment, marked by the temporary closure of our freezer in Toronto and persistent food inflation. We are pleased with our new discount store openings and our growing market share in a very competitive market.
Eric La Flèche, president and CEO
Metro’s continued investment in e-commerce and discount formats appears aimed at balancing margin pressures from suppliers and higher operating costs while keeping prices competitive for shoppers.
What it means for shoppers and investors
For shoppers, the combination of discount-store expansion and online growth suggests more low-cost and convenience options across Metro’s network. For investors, the dividend increase signals confidence in cash flow despite the temporary profit hit from the Toronto distribution-centre outage.
Metro’s results capture a broader industry dynamic: retailers are trying to manage higher input costs and supply-chain disruptions while adjusting formats and channels to retain price-sensitive customers.
Metro will report on future quarters whether the mix of discount formats, e-commerce growth and supply-chain repairs offsets ongoing inflationary pressure. In the near term, the company’s results reflect modest top-line growth, a rebound in adjusted earnings and a willingness to return more cash to shareholders.
Metrogroceryearningsfood inflationretail
