Metro (TSX:MRU) released second-quarter financial results and hosted an earnings call on Wednesday. Read the complete transcript below.
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Access the full call at https://app.webinar.net/lydgeWKezV2
Summary
MRU’s Q2 sales increased by 4.1% to $5.1 billion, driven by new store openings and same-store sales growth.
Food same-store sales grew by 1.8%, while pharmacy same-store sales increased by 5.1%, supported by prescription and front store sales growth.
Gross margin improved slightly to 20.1% of sales, aided by productivity gains and cost control initiatives.
The company’s adjusted EBITDA rose by 6% year over year, while adjusted net earnings increased by 4.4%.
Capital expenditures for Q2 were consistent with last year, totaling $85.3 million.
MRU is managing a strike in Quebec that has impacted sales, with a contingency plan in place to mitigate disruptions.
The company continues to expand its discount store format and sees strong momentum in its pharmacy business.
MRU’s online sales grew by 19.8%, driven by third-party marketplaces and click-and-collect services.
Management remains focused on cost mitigation and offering competitive pricing amidst inflationary pressures.
Future outlook includes continued store expansions, especially in discount formats, and further leveraging of the MOI loyalty program for personalized promotions.
Full Transcript
OPERATOR
Good morning ladies and gentlemen and welcome to The Metro Inc. 2026 Second Quarter Results Conference call. At this time, all lines are in the listen only mode. Following the presentation, we will conduct a question and answer session. And if at any time during this call you require immediate assistance, please press star zero for the operator. Also note that this call is being recorded on April 22, 2026 and I would like to turn the conference over to Sharon Kadosh, Director, Investor Relations and Corporate Finance. Please go ahead.
Sharon Kadosh (Director, Investor Relations and Corporate Finance)
Good morning everyone and thank you for joining us today. Our comments will focus on the financial results of our second quarter which ended on March 14th. With me today is Mr. Eric Laplesse, President and CEO Nicolas Amiot, Executive VP and CFO Marc Giroud, Chief Operating Officer and Jean Michel Couture, President of the Pharmacy Division. During the call we will present our second quarter results and comment on its highlights. We will then be happy to take your questions. Before we begin, I would like to remind you that we will use in today’s discussion different statements that could be construed as forward looking information. In general, any statement which does not constitute a historical fact may be deemed a forward looking statement. Words or expressions such as expect, intend, are confident that will and other similar words or expressions are generally indicative of forward looking statements. The forward looking statements are based upon certain assumptions regarding the Canadian food and pharmaceutical industries, the general economy, our annual budget and our 2026 action plan. These forward looking statements do not provide any guarantees as to the future performance of the company and are subject to potential risks known and unknown as well as uncertainties that could cause the outcome to differ materially. Risk factors that could cause actual results or events to differ materially from our expectations as expressed in or implied by our forward looking statements are described under the Risk Management section in our 2025 annual report. We believe these forward looking statements to be reasonable and pertinent at this time and represent our expectations. The company does not intend to update any forward looking statements except as required by applicable law. I will now turn the call over to Nicolas.
Nicolas Amiot (Executive VP and CFO)
All right, thank you Sharon and good morning everyone. I will go directly to our Q2 results as Eric will later comment on the status of the current strike in our Quebec operations. Q2 sales reached $5.1 billion, an increase of 4.1% versus the second quarter last year. Sales were positively impacted by new store openings, same store sales growth as well as the transfer of one significant pre Christmas shopping day to the second quarter this year. Food same store sales grew by 1.8% in the quarter up 1.5% when adjusting for the Christmas shift. On the pharmacy side, same store sales grew by 5.1%, supported by a 6.1% growth in prescription sales and a 2.8% growth in front store sales. Similar to food. When adjusting for the Christmas shift, front store sales were up 2.3%. Our gross margin reached 1.03 billion, or 20.1% of sales in the quarter. This compares to 20% in Q2 last year. Part of the increase is attributable to productivity gains recorded in our distribution centers. As mentioned on the last call, our operations are back to normal in our Toronto distribution center. Operating expenses were 538.9 million in the quarter, up 3.4% year over year. As a percentage of sales, operating expenses were 10.5% versus 10.6% in the second quarter. Last year reflected continued cost discipline the asset disposals recognized in the second quarter of 2026 generated net gains of 20.4 million, of which 20.1 million was attributable to the disposal of out-of-service warehouses. EBITDA for the quarter amounted to 508.6 million. That’s up 10.3% year over year and represented 9.9% of sales. Excluding the gain on sale from the disposal of out of service warehouses of 20.1 million, adjusted EBITDA stood at 488.5 million, up 6% year over year, reaching 9.6% of sales, an increase of 16 basis points over the second quarter of 2025. Depreciation and amortization expense for the quarter was 144.3 million, up 8.2 million. The increase in depreciation and amortization is mainly due to the increase in retail network investments, including right of use assets as well as ongoing investment in technology. Net financial costs for the quarter were 37.3 million compared to $33.4 million last year. The increase is mainly due to higher interest expense on net debt. On February 25 this quarter, the company tapped the bond market and issued a five year $350 million note bearing interest at a rate of 3.469%. We use the proceeds of the offering to repay debt under our revolving credit facility and for general corporate purposes, including this financing. Our debt to EBITDA ratio stands at about 2.2x. Our effective tax rate of 24.6% which continues to benefit from the Terrebon DC tax holiday, is similar to the effective tax rate of 24.5% in the second quarter last year, adjusted net earnings were 236.5 million in the quarter compared to 226.6 million last year, an increase of 4.4%. While adjusted fully diluted net earnings per share amounted to $1.11 versus $1.02 last year, up 8.8% year over year, our capital expenditures in Q2 totaled 85.3 million, consistent with last year. After 24 weeks on the food retail side, we opened or converted six stores and carried out four major renovation projects for a net increase of 141,000 square feet, or 0.6% of our food retail network square footage. Under our normal course issuer bid program, as of April 2nd, we have repurchased 2.9 million shares for a total consideration of 279.8 million at an average share price of $96.47. In closing, we delivered solid Q2 results supported by strong sales growth and good expense control. On this, I will now turn it over to Eric for additional color on our Q2 results.
Eric Laplesse (President and CEO)
Thank you. Thank you, Nicola and good morning everyone. Before turning to the results, I will now provide an update on the strike that started on March 30th in our Quebec operations and which is impacting produce distribution to our stores in Quebec. We are obviously disappointed by this strike now in its fourth week. We have been back at the bargaining table since April 8 and remain determined to reach an agreement that takes into account the needs of our employees and those of our customers while ensuring the long term competitiveness of our company. As in any situation of this kind, the first days of the labor dispute required adjustments while our contingency plan was being fully implemented. Our contingency plan is now in place and our stores, although not in perfect condition, are …
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