Metro Inc. Reports Mixed Q1 2026 Financial Results Amid Operational Challenges
Metro Inc., one of Canada's leading grocery and pharmacy retailers, has reported a significant decline in net earnings for the first quarter of 2026, despite notable growth in certain sales categories. The company's financial performance reflects a complex operating environment marked by persistent inflation and supply chain disruptions.
Financial Performance Overview
The company announced net earnings of $226.3 million for the quarter ended December 20, 2025, representing a substantial 12.8% decrease compared to the $259.5 million reported during the same period in the previous year. This translates to fully diluted net earnings per share of $1.05, down 9.5% from $1.16 in the first quarter of 2025.
Despite the earnings decline, Metro achieved total sales of $5.3 billion, marking a 3.3% increase from the previous year. The company attributed the earnings pressure to several factors, including the temporary shutdown of its frozen food distribution centre in Toronto and the transfer of a significant pre-Christmas shopping day to the second quarter.
CEO Comments on Operating Environment
Metro Chief Executive Eric La Flèche acknowledged the challenging circumstances in a company press release, stating, "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."
La Flèche emphasized that despite these headwinds, the company managed to achieve growth in both sales and earnings per share on an adjusted basis, demonstrating resilience in a difficult market.
Adjusted Financial Metrics Show Strength
When examining adjusted figures, Metro's performance appears more robust. Adjusted net earnings for the quarter reached $248.7 million, representing a 1.3% increase compared to the previous year. Adjusted fully diluted net earnings per share stood at $1.16, reflecting a solid 5.5% growth.
The company also announced a dividend increase, with the declared dividend rising to $0.4075 per share, marking a 10.1% increase from the previous year's payout.
Sales Performance Across Categories
Despite the overall earnings decline, Metro reported positive sales growth in several key areas:
- Food Same-Store Sales: Increased by 1.6% during the quarter
- Online Food Sales: Surged by an impressive 25.8%
- Pharmacy Same-Store Sales: Grew by 3.9%, driven primarily by a 5.1% increase in prescription drugs
The company noted that front-store pharmacy sales increased by 1.3%, primarily driven by health and beauty products, though this growth was partially offset by a delayed cough and cold season that affected typical seasonal sales patterns.
Market Context and Future Outlook
The grocery retail sector continues to face significant challenges, including ongoing food inflation that has persisted across the Canadian market. Metro's experience reflects broader industry trends where retailers must navigate supply chain disruptions while meeting evolving consumer demands.
The strong performance in online food sales, which grew by more than 25%, indicates that Metro's digital transformation and e-commerce initiatives are gaining traction with consumers. This growth trajectory suggests that online channels will continue to play an increasingly important role in the company's overall sales strategy.
As Metro moves forward, the company will need to balance operational challenges with strategic investments in both physical and digital infrastructure to maintain competitiveness in Canada's evolving retail landscape.
