Metro Expands Discount Stores After $1B Supply Chain Overhaul

Metro Inc., one of Canada’s leading grocery and pharmacy retailers, is charting a path for growth in 2025, with plans to open 12 discount stores and expand its loyalty and digital offerings. This comes after a six-year, $1 billion supply chain modernization project was successfully completed.

The Montreal-based retailer, which operates Metro grocery stores and Jean Coutu pharmacies, has finalized its multi-year supply chain overhaul. The project included the establishment of automated fresh and frozen food distribution centres in Quebec and Ontario. The recent completion of the Ontario fresh food facility marks the final phase of the initiative, enhancing capacity and operational efficiency.

“This transformation will provide capacity for future growth and efficiency while strengthening our market position,” said Eric La Flèche, Metro’s president and CEO, during the company’s fourth-quarter earnings call.

The investments are expected to streamline operations across Metro’s network of over 950 grocery and pharmacy locations in Ontario and Quebec, improving service levels and lowering costs.

Earnings and Revenue Performance

Metro’s fourth-quarter results reflected resilience amid economic headwinds. The company reported earnings of $219.9 million, slightly below last year’s $222.2 million due to the shorter quarter and the impacts of a labour strike earlier in the fiscal year. Adjusted profit per diluted share rose to $1.02, compared to $0.99 in the same quarter last year.

Same-store sales, a key retail performance metric, increased by 2.2% for groceries and 5.7% for pharmacies. Pharmacy gains were driven by a 6.8% rise in prescription drug sales and a 3.3% increase in front-store sales, which include health and beauty products and over-the-counter medications.

Expanding Discount and Pharmacy Networks

Metro plans to open 12 new discount stores in 2025, including conversions of existing full-service locations to banners like Super C in Quebec and Food Basics in Ontario. This follows nine new grocery store openings in 2024, including three Super C conversions.

The company also invested heavily in its pharmacy network, completing 28 renovations in the past fiscal year. Plans for 2025 include 30 additional pharmacy projects, comprising 12 expansions and 18 renovations.

Discount banners continued to outperform other segments during the quarter as inflation-conscious shoppers sought lower-priced options. “We see opportunities to expand our discount network in both Ontario and Quebec,” La Flèche said.

MOI Loyalty Program Drives Engagement

Metro launched its MOI Rewards program in Ontario in October, quickly attracting over one million members within four weeks. The program replaces Metro’s previous partnership with Air Miles, allowing the company to focus on building customer loyalty through its in-house platform.

“Promotional penetration was up again this quarter compared to last year, and private-label sales continue to outpace national brands,” La Flèche noted, reflecting a shift toward value-driven shopping habits.

Metro reported a 27.6% increase in online grocery sales year-over-year, supported by third-party partnerships for same-day delivery and the expansion of its click-and-collect services to discount banners like Super C in Quebec. Plans are underway to introduce similar services to Food Basics in Ontario in 2025.

Inflation and Competitive Pressures

Canadian grocery retailers continue to face challenges from inflation and increased competition. Statistics Canada reported a 2.7% year-over-year rise in grocery prices in October, exceeding the overall inflation rate of 2%. Metro’s internal food basket inflation metric, based on frequently purchased goods, was also higher than the Consumer Price Index for the quarter.

Rival Loblaw is aggressively expanding its discount banner, Maxi, by converting full-service Provigo locations in Quebec. Metro’s focus on discount and private-label offerings positions it well to compete in this segment. Loblaw also launched a No Name grocery concept in Ontario and is expanding its No Frills banner, including several new stores in downtown Toronto.

Positioned for Long-Term Growth

With its supply chain transformation complete and plans to expand both discount stores and pharmacy operations, Metro expects to return to profit growth in fiscal 2025. The company reaffirmed its medium- and long-term target of 8% to 10% annual growth in adjusted earnings per share.