Metro Inc. Faces $22 Million Earnings Hit from Distribution Closure

Metro Inc. has announced that the ongoing closure of its frozen food distribution centre in Toronto will lead to a significant financial impact of $22 million on its earnings for the current quarter. The facility, which opened in 2022, is one of the company’s new fully automated distribution centres designed to enhance efficiency in supply chain operations.

The closure, which has lasted nearly a month, was prompted by a mechanical failure in the refrigeration system. According to a company press release, the issue affected multiple components of the system. Repairs are currently underway, described as complex but progressing normally. Metro anticipates that operations will gradually resume in the coming weeks.

In light of the shutdown, Metro has implemented contingency plans to ensure that its Metro and Food Basics stores in Ontario remain adequately stocked. The company’s investment in modernizing its supply chain, which totals $1 billion, aimed to improve service and reduce handling time through the use of advanced automated facilities. These upgrades were intended to create more efficient supply chains and better in-stock positions at retail locations by enabling more precise order fulfillment.

Metro is set to report its fourth-quarter earnings on November 19, 2023. The net impact of $22 million, calculated after taxes, includes losses from spoiled food products and direct costs associated with the repairs. Notably, this figure does not account for any potential reimbursements from insurance claims that may arise in the future. The company also indicated that additional one-time costs related to the incident may affect results in the following quarter.

As the situation develops, stakeholders will be closely monitoring Metro’s recovery efforts and the implications of this incident on its financial performance moving forward.