Metro Profit Rises; Groupe Dynamite to Close Canadian Stores

Grocer Metro sees sales of Canadian products grow as Q2 profits rise

Metro Inc. reports that sales of Canadian-made products are growing faster than other categories in its stores, a trend that accelerated during the second quarter. CEO Eric La Flèche told analysts the company is prioritizing local goods by increasing their visibility across all banners — in store, online and in promotional materials such as the weekly flyer.

La Flèche said shoppers have shown greater interest in buying Canadian products amid rising trade tensions with the U.S. and that those items are “selling well and better than the rest of the store.” Metro has increased shelf signage and in-store displays to make local choices easier for customers.

On the topic of tariffs, La Flèche noted that Ottawa has imposed retaliatory duties on some U.S. imports. While those measures have not yet driven noticeable inflation across the business, Metro has seen select supplier requests for cost increases. The company typically asks for time to evaluate such requests and is actively seeking alternatives — negotiating with vendors, exploring different suppliers and finding ways to protect margins.

“We’re managing as best we can to find sources of supply to protect our costs and to minimize inflation,” La Flèche said. He added that some U.S. vendors are shifting production to other countries to avoid tariffs; for example, large berry suppliers are using fields in Mexico more frequently for certain products.

For the 12-week period ended March 15, Metro reported net profit of $220 million, or 99 cents per diluted share, compared with $187.1 million, or 83 cents per diluted share, a year earlier. On an adjusted basis the company earned $1.02 per diluted share, up from an adjusted $0.91 a year earlier.

Food same-store sales rose 5.3% for the quarter and 3.9% after adjusting for the Christmas shift. Pharmacy same-store sales increased 7%, driven by a 7.8% rise in prescription drug sales and a 5.3% gain in front-store sales. Overall second-quarter revenue totaled $4.91 billion, a 5.5% increase from the prior year.

Looking ahead, Metro described the operating environment as uncertain. “As we begin our third quarter, we face an uncertain economic environment. It is difficult to predict how the situation will evolve and how it will impact consumers and our business,” La Flèche said. The company remains confident in continued growth but warned that volatility and shifting consumer behaviour could affect performance.

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Groupe Dynamite to close up to 10 stores this year but open 20 more

Montreal-based Groupe Dynamite Inc. expects to close roughly 10 stores this fiscal year, primarily in Canada, while planning to open up to 20 new locations in the United States. The retailer also intends to relocate or renovate between 10 and 15 Dynamite and Garage stores during the same period.

CEO Andrew Lutfy described the changes as part of a disciplined approach to the company’s physical footprint. Groupe Dynamite aims to grow its store network from the current 298 locations to about 350 by the end of fiscal 2028. The company did not immediately provide figures on potential job impacts from the planned closures and relocations.

Lutfy emphasized “agility” as a core mindset for the company, noting that apparel retailers are navigating greater uncertainty amid new and expanding tariffs the U.S. has imposed on imports from numerous manufacturing countries. These duties have raised concerns across the industry about higher production and shipping costs and the potential need to pass those costs to consumers.

Groupe Dynamite’s leadership says the business is positioned to cope with these pressures in part because it has raised prices over recent years at a pace that outpaced inflation. Still, the company recognizes that prolonged tariff-driven cost increases could squeeze consumers’ discretionary spending, particularly on higher-priced items.

“There’s anxiety out there,” Lutfy acknowledged, but he also highlighted the resilience of apparel as a category. He argued that modest purchases such as affordable clothing can remain attractive to consumers even during tougher economic times and that such periods can offer opportunities to gain market share.

Operationally, Groupe Dynamite is shifting sourcing away from China toward countries like Bangladesh, Cambodia and Vietnam to reduce risk. The company is also partnering with a third-party logistics provider to open a U.S. warehouse in July, a move intended to speed up shipping to American customers.

For the 13-week period ended Feb. 1, Groupe Dynamite reported a profit of $31.0 million and revenue of $271.8 million, with comparable store sales up 9.5% and additional contributions from new store openings. On an adjusted basis, earnings were 33 cents per diluted share, up from an adjusted 28 cents a year earlier.

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