The chief executive of Metro Inc. says 2025 was a particularly challenging environment for the grocer as a slowing economy and high food prices continued to hammer customers’ wallets.
“Overall inflation stabilized but housing costs and food inflation remained higher against the backdrop of rising unemployment,” Metro chief executive Eric La Flèche said at the company’s annual meeting on Tuesday.
“This puts significant pressure on household budgets, with consumers seeking savings more than ever when purchasing,” he said.
The grocer has responded by growing its discount footprint in Quebec and Ontario. It has opened at least 24 discount stores over the past three years and is planning on another dozen this year.
“You have no choice. If you don’t offer value, you don’t attract customers,” La Flèche told analysts during an earnings call, which followed the annual meeting.
Metro has also been fairly consistent but “rational” with its promotional intensity, he added.
Other major grocers have gone the same route over the last few years, either opening more discount banners or converting conventional stores into their discount brands.
Statistics Canada reported food inflation in December rose five per cent annually, outpacing headline inflation.
La Flèche welcomed Ottawa’s temporary move on Monday proposing a 25 per cent increase to the GST credit for five years that’s meant to help lower-income consumers deal with the high cost of groceries.
The federal government announced a rebranding of its GST credit to a multi-billion-dollar Canada Groceries and Essential Benefit program, which would benefit more than 12 million Canadians, if the measure is passed.
“Any help that the government provides to low-income Canadians, I think, is good,” La Flèche told reporters during a press conference in Montreal on Tuesday.
He said there are factors, including high commodity prices of coffee, meat and fresh produce, that are beyond the grocer’s control — and not all of those costs can be passed on to consumers.
“It’s affecting our ability to promote, it’s affecting what we’d like to offer at a lower price, but the costs keep going up.”
La Flèche said the grocer has been negotiating with vendors to keep prices low, but factors — fuel, transportation, commodity prices — make it difficult for everyone along the supply chain.
He said high prices have also impacted tonnage growth, or the amount of product sold by volume, which has remained “flat or slightly down” across the industry.
Earlier on Tuesday, the grocery and drugstore retailer raised its dividend as it reported its first-quarter profit fell compared with a year ago, weighed down by costs related to the temporary closure of its frozen food distribution centre in Toronto.
Metro was forced to stop work at its Toronto frozen food distribution centre on Sept. 12 due to an issue with its refrigeration system and resumed operations on Nov. 10.
“The impact of this event continued to be felt in our first quarter of 2026, as we continue to incur non-recurring direct costs,” La Flèche said.
The distribution centre malfunction amounted to $15.9 million in costs after taxes in the first quarter, mainly in inventory losses and the temporary shutdown.
In its outlook, the company said the challenges related to the disruption at the distribution centre are now behind it.
The company said it will pay a quarterly dividend of 40.75 cents per share, up from 37 cents per share. The move comes as the grocer earned $226.3 million or $1.05 per diluted share for the 12-week period ended Dec. 20, compared with a profit of $259.5 million or $1.16 per diluted share in the same quarter a year earlier.
Metro shares on the Toronto Stock Exchange were down 6.57 per cent at $91.86 on Tuesday afternoon.
On an adjusted basis, Metro said it earned $1.16 per diluted share for the quarter, up from $1.10 per diluted share.
Sales for the quarter totalled $5.29 billion, up from $5.12 billion a year earlier.
The increase came as food same-store sales were up 1.6 per cent, while pharmacy same-store sales rose 3.9 per cent with a 5.1 per cent increase in prescription drugs and a 1.3 per cent increase in front-store sales.
Sales were negatively impacted by the transfer of one significant pre-Christmas shopping day to the second quarter this year and by the temporary shutdown of the frozen food distribution centre, the company said.
Adjusting for the Christmas shift, Metro says same-store food sales were up 1.9 per cent, while pharmacy front-store sales were up 1.7 per cent.
This report by The Canadian Press was first published Jan. 27, 2026.
Companies in this story: (TSX: MRU)
