Metro (TSX: MRU) reported its Q4 2025 results this week, with sales jumping 3.4% to $5.11 billion from $4.94 billion, with food same store sales up 1.6% and pharmacy same store sales up 4.8%. For the full fiscal year, sales increased 3.7% to $22.00 billion from $21.22 billion.
Quarterly operating income increased 5.5% to $484.7 million, representing 9.5% of sales compared with 9.3% last year. For the year, this measure rose 4.8% to $2.08 billion, also at 9.5% of sales versus 9.4% in 2024, helped by higher gross margins but partially offset by freezer related costs.
Operating expenses edged higher as a percentage of sales to 10.5% in the quarter and 10.4% for the year, compared with 10.4% in both periods last year. The company attributes the deterioration to $6.1 million of direct costs from the temporary shutdown of its frozen food distribution centre in Toronto, and states that excluding these costs, operating expenses as a percentage of sales would have been similar to 2024.
The freezer incident produced a sizable one off hit. Metro recognized a $24.5 million inventory write down to net realizable value related to unsalvageable frozen products, plus direct costs that bring the total pre tax impact to $30.6 million and after tax hit to net earnings of $22.5 million. In contrast, 2024 included a $20.8 million impairment of a loyalty program asset tied to withdrawing Ontario Metro stores from the Air Miles program and a $6.8 million gain on sale of assets.
On a reported basis, fourth quarter net earnings slipped 1.3% to $217.0 million from $219.9 million, while fully diluted EPS increased 2.0% to $1.00 from $0.98, showing that share repurchases offset the slight profit decline. Full-year net earnings rose 9.4% to $1.02 billion from $931.7 million, and fully diluted EPS surged 12.7% to $4.63 from $4.11.
Excluding freezer-related costs and intangible amortization, adjusted net earnings for the quarter increased 8.6% to $246.0 million from $226.5 million, with adjusted EPS up 10.8% to $1.13 from $1.02. For the year, adjusted net earnings rose 7.9% to $1.05 billion from $972.9 million, and adjusted EPS climbed 10.9% to $4.77 from $4.30.
Metro has repurchased 8.7 million shares at an average price of $97.51 for a total consideration of $848.3 million as of November 7, out of an authorization to buy back up to 10.0 million shares. The board also maintained a quarterly dividend of $0.37 per share, unchanged from the prior quarter.
Looking ahead, management expects the freezer restart to be essentially complete by the end of December and estimates an additional $15 to $20 million hit to net earnings in the first quarter of fiscal 2026 from remaining direct costs.
Metro last trade at $100.19 on the TSX.
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