METRO REPORTS 2026 THIRD QUARTER RESULTS Français

MONTRÉAL, Aug. 12, 2026 /CNW/ — METRO INC. (TSX: MRU) today announced its results for the third quarter of Fiscal 2026 ended July 4, 2026.

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.