Q3 2026 Metro Inc Earnings Call Transcript
Key Points
- Pharmacy segment delivered strong performance with same-store sales growth of 4.8%, driven by a 6.4% increase in prescription sales and robust two-year stacked growth of 13%.
- Online sales surged 16.3% in the quarter, supported by third-party marketplaces, click and collect services, and delivery options in discount banners.
- The company announced network optimization initiatives, including converting 10 Metro stores to Food Basics in Ontario, expected to improve store contribution and generate returns above typical investment thresholds.
- A strategic partnership with FGF Brands for bakery manufacturing will generate $90 million in proceeds, allowing Metro to focus on core retail and pharmacy operations.
- Despite the strike, underlying performance excluding the impact showed resilience, with adjusted EPS of $1.24 within guidance and continued progress on retail investment plans, including opening five new discount stores.
- The ongoing strike at the produce distribution center in Laval significantly impacted results, with an estimated $0.32 per share hit and a 1.5% decline in food same-store sales.
- Adjusted EBITDA fell 11.3% and adjusted EPS dropped 18.4% year-over-year, reflecting the strike's severe impact on sales, margins, and costs.
- Food same-store sales remained negative at -1.5% in the fourth quarter to date, with no clear resolution timeline for the labor conflict, indicating continued pressure.
- The company incurred $25.7 million in restructuring charges and $32.1 million in asset impairments related to network optimization, including closing a dark store in Montreal.
- Gross margin contracted to 18.8% of sales from 19.8% last year, driven by $87 million in lost profit and incremental costs from the strike, with ongoing elevated promotional activity and competitive intensity.
Good morning, ladies and gentlemen, and welcome to the METRO Inc., 2026 third quarter results conference call. At this time, note that all the presentation we will conduct a question-and-answer session. And if at any time during this call, pressor an operator. Also note that this call is being recorded on August 12, 2026.
The I would now like to turn the conference over to Sharon Kadoche, Director, Investor Relations and Corporate Finance. Please go ahead.
Good morning, everyone, and thanks for joining us today. Our comments will focus on the financial results of our third quarter, which ended on July 4. With me today is Mr. Eric La Fleche, President and CEO; Nicolas Amyot, Executive VP and CFO, Mark Giroux, Chief Operating Officer; and Jean-Michel Coutu, President of the Pharmacy division.
During the call, we will present our third quarter results and comment on his highlights. We will then be happy to take your questions.
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