Strike at Laval, Que., distribution centre to weigh on Metro’s bottom line

TORONTO – Slim pickings for asparagus at one store and missing salad kits at another: There’s limited stock for some produce items at Metro-owned grocers across Quebec as a strike that began more than eight weeks ago drags on.

“It’s not 100 per cent, but we have at least 90 per cent of our stock,” said Ibrahim Naitalara, speaking in French. Naitalara, who works at a midtown Montreal Metro, said the store has been running short on Dole salad kits and tofu since the strike began.

“We have vegetable problems,” Naitalara added.

A Super C in Montreal’s Saint-Laurent borough was running very low or totally out of asparagus, red onions, organic tomatoes and clementines. Still, customers are finding most of what they’ve been looking for.

The supply gaps have emerged as 550 union workers at Metro’s Laval, Que., distribution centre are on an indefinite general strike that began on March 30, with union members demanding better pay and working conditions. 

It’s the only produce distribution centre Metro has in Quebec and supplies more than 350 stores in the province, including Super C and Metro Plus. 

And as the strike continues, analysts are expecting sales to take a hit.

The job action will likely make third-quarter earnings “noisy,” said Michael Van Aelst, managing director of consumer staples at TD Securities, in an April note. 

Because the strike started days before the Easter long weekend, Van Aelst said it would have a “disproportionately larger impact on sales.” He’s estimating a four per cent decline in the grocer’s earnings per share in the third quarter. Metro usually reports its third-quarter earnings in mid-August.

Metro chief executive Eric La Flèche said contingency plans have been put in place, but didn’t share the full scope of the strike’s cost impacts when analysts asked him during the second-quarter earnings call last month.

“We will be able to specify the financial impact once the dispute is settled,” Metro spokesperson Marie-Claude Bacon said in an email on Tuesday.

As labour negotiations continue, she said most Quebec stores have generally remained well stocked thanks to the company’s contingency plans. However, that’s likely to increase the cost of operations.

Analysts seem to think the overall impact on the company will be moderate, at about one per cent of earnings per share for the full year, though the estimates assumed the strike would last just six weeks.

“We know they’re using a subcontractor and therefore it’s hitting their profit margins. It’s making business more difficult for them,” said Frédéric Gervais, who is on the union bargaining committee and a part of the Fédération du commerce, affiliated with the CSN. The union represents workers at the Laval distribution centre, the head office and the Mérite 1 warehouse.

Generally, the distribution centre ships “the freshest” fruit and vegetables to Quebec stores five times a week, Gervais said. But even as the shelves are mostly stocked, he said the strike is affecting the quality of fruits and vegetables at the stores. 

Demand for higher pay sits at the heart of the dispute. The previous agreement provided for 11 per cent cumulative pay increases between 2020 and 2025, which Gervais said couldn’t keep up with inflation during that time.

“We’re asking to make up for the lost ground,” he said in an interview.

The union has filed a complaint with Quebec’s Administrative Labour Tribunal alleging Metro is using replacement workers and drivers, which is against Quebec’s labour code.

The union said the complaint was based on the reports of two inspectors from the province’s labour ministry, which claimed the grocer may have used such workers to remove non-perishable products from its warehouse.

Bacon said Metro has “fully complied with the labour code and has implemented measures to continue meeting the needs of its customers across Québec, in accordance with the applicable legal framework.”

A larger headwind to earnings is likely coming from incremental contingency costs, such as higher sourcing, transportation, handling, and spoilage, said Kathleen Wong, a senior investment analyst at Veritas Investment Research, in an April report.

She estimates a one per cent impact on Metro’s total earnings for 2026, assuming the grocer incurred about $2 million per week in added costs.

“The disruption should be modest and temporary,” Wong said in an email. 

Metro operates 390 food stores in Quebec out of its 678 store footprint, which implies Quebec represents about 57 per cent of Metro’s food sales, or $10 billion annually, according to Veritas.

Distribution centres have weighed on the grocer’s earnings over the last year, as it made big investments in its supply chain.

Van Aelst said spending on automated distribution centres stymied earnings growth for a year; then the Ontario distribution centre freezer failed in September, and now the Laval, Que., produce distribution strike has created another challenge, he said. 

“Metro needs some smoother waters for valuation to move back above three-to-five year averages,” he said.

This report by The Canadian Press was first published May 27, 2026.

— With files from Christopher Reynolds in Montreal

Companies in this story: (TSX: MRU)