Grocery and drugstore retailer Metro Inc. was hit by costs related to problems at its frozen food distribution centre in Toronto in the fourth quarter, with financial impacts expected to continue into the first quarter.
The company said operations at the facility resumed last week after it was shut down for almost two months, but the temporary closure cost it $22.5 million in Q4 as it reported slightly lower annual profits.
Metro chief executive Eric La Flèche said the company expects the distribution centre to be essentially back to normal by the end of December.
“I want to thank all our teams who continue to execute our contingency plan to supply our stores, thereby minimizing the impact on our customers,” he said in a statement on Wednesday.
Metro was forced to stop work at the facility on Sept. 12 due to an issue with its refrigeration system. It resumed operations on Nov. 10.
La Flèche said on a conference call that a mechanical issue, not one related to automation, was responsible for the problems with the refrigeration system. He added that the company is currently working with insurers to confirm the amount it will be able to recover.
“Looking forward to Q1 of 2026, we estimate that the direct costs associated with the rental of temporary chilling equipment and with the execution of our contingency plan will impact our net earnings by approximately $15 million to $20 million,” chief financial officer Nicolas Amyot said on the call Wednesday.
In December of last year, Metro reached the final milestone in a seven-year, almost billion-dollar supply chain transformation, which added new automation technology across its warehouses in Quebec and Ontario.
The completion of Metro’s supply chain revamp, which began in 2017, was marked by the opening of the final phase of its new automated fresh distribution centre in Etobicoke, Ont. It came after Metro opened an automated warehouse for frozen products also in Etobicoke in 2022.
In Quebec, the company previously opened an automated fresh and frozen centre in Terrebonne and expanded its fresh produce centre in Laval.
Metro said it earned a fourth-quarter profit of $217 million, down from $219.9 million in the same quarter last year.
The company behind the Metro grocery chain and Jean Coutu drugstores says its profit amounted to $1.00 per diluted share for the 12-week period ended Sept. 27, up from 98 cents per diluted share a year ago when it had more shares outstanding.
La Flèche said on the call that Metro’s internal food basket inflation rate was below Statistics Canada’s consumer price index for food, but some pressures persist.
“We continue to see inflationary pressures on certain commodity prices, namely in the meat category,” he said.
“We are presently in our price freeze period. However, we continue to receive price increase requests from our vendor partners at levels higher than the typical two to three per cent.”
Meanwhile, the buy Canadian movement has continued to ease, La Flèche said.
“There’s still more growth in Canadian product sales than in non-Canadian product sales, but that growth has somewhat narrowed versus what we saw in spring and summer. It’s declining a bit,” he said.
“Since counter-tariffs were lifted on Sept. 1, some of these U.S. product prices have gone down, so that’s maybe contributed to the narrowing of that gap.”
Sales for the quarter totalled $5.11 billion, up from $4.94 billion in the same quarter last year.
Food same-store sales for the quarter were up 1.6 per cent, while pharmacy same-store sales gained 4.8 per cent with a 5.5 per cent increase in prescription drugs and a 2.9 per cent increase in front-store sales.
On an adjusted basis, Metro says it earned $1.13 per diluted share in its latest quarter compared with an adjusted profit of $1.02 per diluted share in the same quarter last year.
This report by The Canadian Press was first published Nov. 19, 2025.
Companies in this story: (TSX: MRU)
