Thank you, Jessa. Good morning everyone and thank for joining us today.

Our comment will focus on the financial results of Metro's third quarter which ended July 02, 2016. Joining me today is Eric La Fleche, President and Chief Executive Officer, and Mr.

Francois Thibault, Executive Vice President and Chief Financial Officer. During this call we will present our third quarter financial results and comment on third quarter highlights, and we will then be happy to take your questions.

Before we begin, I would like to remind you that we will use in today's discussion different statements that could be construed as being forward-looking information. In general, any statement which does not constitute a historical fact may be deemed a forward-looking statement.

Expressions such as expect, intend, or are confident that, will, and other similar expressions are generally indicative of forward-looking statements. The forward-looking statements are based upon certain assumptions regarding the Canadian food industry, the general economy and our annual budget, as well as our 2015-2016 action plans.

These forward-looking statements do not provide any guarantees as to the future performance of the Company and are subject to potential risks, which are known or unknown, as well as uncertainties that could cause the outcome to differ significantly. A description of the risks which could have an impact on these statements can be found under the Risk Management section of our 2015 Annual Report.

We believe these statements to be reasonable and pertinent at this time and represent our expectations. The Company does not intend to update any forward-looking statements except as required by applicable law.

I would now like to turn the conference to Francois.

Thanks, Roberto, and good morning everyone. Sales for the third quarter totaled $4 billion, that's an increase of 4.5% versus third quarter last year, and same-store sales continue to trend positively as well, coming in at 3.9% for the quarter, while our internal measured food basket inflation was 1.5%.

EBITDA in Q3, 2016 totaled $297.4 million, or 7.4% of sales, and that's up 7.1% from $277.6 million or 7.2% of sales for the same quarter last year Our gross margin in Q3 was 19.6% compared to 19.8% in the same quarter last year and operating expenses as a percentage of sales was 12.2% versus 12.5% for the corresponding quarter last year. So we're still leveraging our sales growth.

Our depreciation expense at $56.4 million is about $2 million higher than last year mainly due to higher investments in fixed assets. Our share of earnings from our investment in Alimentation Couche-Tard was $15.5 million in the third quarter versus $8.7 million for the same quarter last year.

Third quarter 2016 income tax expense of $61.7 million represented an effective tax rate of 25.9% compared with last year's expense of $50.2 million for an effective tax rate of $23.5 million. You will recall that last year we benefited from some positive outcome in certain tax files.

Net earnings for the third quarter were $136.5 million, that's an increase of 8% versus $163.5 million last year. Our fully diluted net earnings per share rose 12.5% to $0.72 a share, up from $0.64 a share last year.

Under the normal course issuer bid program, the Company may repurchase up to 18 million of its common shares between September 10, 2015 and September 9, 2016. As of July 29, 2016, we've repurchased 8.6 million shares for total consideration of $321.1 million for an average price of $37.48 a share.

Yesterday the Board of Directors approved a dividend of $0.14 a share, that's the same amount as in Q1 and Q2, and a 20% increase from last year. To conclude, we remain well positioned financially with the ratio of non-current debt to total capital of 31.2% at the end of the quarter.

Our strong liquidity position gives us significant flexibility for future growth, and we intend to continue investing in our networks to grow earnings and create value. This concludes my comments.

I would now like to turn it over to Eric La Fleche. Thank you.

Thank you, Francois and good morning everyone. So building on the momentum of the first half of the year, the Company continued to deliver strong operating results in the third quarter and gained market share.

Effective merchandising, solid execution and our consistent investments in our network produced same-store sales of 3.9% in the quarter on top of 4.3% comp sales in the same quarter last year. We're quite pleased with that strong performance which was driven by increased traffic, basket size and tonnage.

The slightly lower gross margin rate resulted mostly from higher sales from our discount banners, but was more than offset by a lower operating expense rate which enabled us to grow EBITDA by 20 basis points to 7.4%. The market environment was again very competitive and as you know, the quarter was marked by rapidly declining food inflation.

The decrease was due mostly to some deflation in meat products and the lower inflation in fruits and vegetables. Current food inflation remains low, as more fresh products are being purchased locally and the exchange rate has stabilized over last year.

On the CapEx front, the Company and its retailers opened three new stores and carried out 17 major renovations or expansions during the quarter. Year-to-date, six new stores were opened and 31 expansions or major renovations were completed for a gross expansion of 340,000 square feet and a net increase of 90,000 square feet or 0.4% net of store closures.

Adonis is also performing well in both Québec and Ontario and we recently opened the 11th store in the Griffintown area of downtown Montreal. For fiscal 2017, we expect total CapEx of about $350 million including a dozen new replacement and converted stores as well as several expansions and major renovations.

In closing, while we expect the competition going forward will remain intense and despite the lower inflation environment, we are well positioned with our multiple formats in both markets, and we are confident that we can continue to perform well as we have demonstrated in the past. That concludes my comments.

And we'll be happy to take your questions

Can you just talk a little bit about how the consumer behavior may have changed over the past several quarters, given that you are seeing – it seems like you are seeing that shift to discount reaccelerating?

Well, accelerating a bit. We are holding our own on the Metro side too, but clearly the spike in inflation over the past six to nine months, or actually the first six months of our fiscal year clearly put a lot of focus on price, and I think that drove some more traffic into the discount store which we're well positioned to perform well in that kind of environment.

So, clearly that was a factor. And as I said in my opening remarks, we have a bit of a higher growth in discounts.

So that's reflects the consumer traffic pressure.

And so is all the gross margin contraction, not that there is a lot, but you had very strong same-store tonnage growth. So, was the gross margin contraction only because of the shifted discounts or also is there any sign of increased competition or price investments out there?

No. The market is competitive and we say it and we mean it.

It's a competitive market out there, so we are competitive. We will remain competitive.

But as I explained, there is no big change in our pricing strategy. The market remains rational and the slight decrease and I insist on slight, if you take out the rounding effect for year-over-year, it's like 12 basis points anyways.

So, it's just the shift a bit more to discount.

Just on the balance sheet, I think you had a target of 2.5 times by the end of the year, or net debt to EBITDAR, could you update us on where you are tracking right now and how you see the – you hitting that target or being below it perhaps this year?

It's Francois. You are right.

We're about – slightly above 2 times versus the target of 2.5. The target remains I think – our performance is that we know, quarter-over-quarter, we increased our EBITDA significantly, so that we now would have more debt capacity that's being added to our balance sheet.

So, target remains, but we'll get there gradually, but we are about 2 times right now.

So that's got to be definitely a sign that you are exceeding your internal expectations for performance, would it not be?

We look at – we always look and make sure we have the right balance between our capital investments, you know the dividend of course and then you know then we use our leverage and the share buyback to put that in line. But yeah, the performance has been, as we demonstrated in the past, the performance in operating income growth has been good.

Just on the price discounting competitive environment, I mean how would you characterize it as versus a year ago? You definitely said it's very competitive and you almost underlined that, but is it more competitive than it was a year ago?

I would say it's about the same. There is no, as I said it's rational.

It's intensive promotion. You heard me say those words before.

So, I would quality that they both are same.

So some of the media stories on some of the price discounting and request of vendors and so on, it seems then in that context perhaps a little over done in the media and we're kind of same old in terms of negotiations between retailers and vendors, would you say?

The media, yeah, tends to sometimes over play some stories. I won't comment on that.

You know, what you read about supplier relations and cost reduction demands by some of our competitors, we always make sure that we have competitive cost as we need to be competitive at retail for our customers. So you can be sure that we check retail prices, we check margins, and if something is happening in the market, we make sure we get our fair share.

So, you can count on us to continue to negotiate fairly, but hard with our suppliers to make sure we have the right consumer offer and the right prices as we've always done.

Okay. And just last question, just on your ability to drive more efficiencies and cost savings, you've done a good job in the past.

Where do you see that going forward? Is it become less of an opportunity to do that or is it similar to what you've had in the past and could you maybe add some color as to where you could see some improvements?

We – it's a continuous process. We always strive to reduce cost, gain productivity in every aspect of our business.

End-to-end, it's a large business with many and across the 600 stores and a lot of these, there's always opportunity to do better, and we invest in processes and technology to do better. So, we won't disclose a huge life-changing project, but I can tell you that we're keen on our cost and we try to be very productive.

A good example of this here would be store inventories, that's come down. We're more efficient at store level, our in-stock position is better, our shrink is lower, because we were able to successfully reduce inventory.

So that's an example of efficiency and good execution by our team to not only save money, but be in better shape for the customer. So, it's an ongoing process.

That's great. Sorry, if I could squeeze one more in, cold you just give us an update on your e-commerce initiative?

Yes. As we said, we would launch a pilot before we ended the year.

So we're on track to do that. So, I guess this fall, we'll be coming up with a test pilot for a certain number of stores.

So, stay tuned, but nothing to announce for now.

Eric on the Brunet business, can you talk a little bit about the lifting of the cap on a professional allowance in Québec and how that will, or has been impacting the results of Brunet?

For the listing of the cap, I would say has benefited the pharmacist, the franchised pharmacist are receiving more professional rebates from generic companies. It's I guess late April.

It has not yet has an impact on us, that's McMahon at the wholesale level. Again there is regulatory uncertainties call it that way.

So we're expecting more visibility, more clarity from the Québec government in the coming weeks, we hope or months. The year-over-year is better to see more clearly what the impact will be on us as a distributor and our franchisees at retail.

So McMahon has not reorganized itself in any way like some of the – your competitors have so that it's a manufacturer. It's business is strictly limited to distribution.

That's right.

Okay. And then lastly I just wanted to ask you about the outlook section.

There is a subtle change in your outlook language, whereas in the previous quarter, you like the wording was we are confident that we can continue to grow in the coming quarters? Just to drop that language, and I know it's only a subtle change, but I'm just wondering why you dropped that from the outlook language.

It's to be less repetitive, as there is not change. We have the same basic outlook.

Thanks and good morning everyone. On prior calls Eric, you've talked a little bit about what you are seeing in terms of consumer behavior, some trading down, for not only – in terms of format, but also in terms of buying patterns.

Are you still seeing that? Is it accelerating, decelerating, if you could just talk a little bit about that please?

Well, again I spoke earlier, a lot of focus on price, second half of the year, I think favored the discount channel, and I guess our discount stores benefited from that. People want value for money.

There is nothing really new, so we have to offer that in both of our formats, both Metro and discounts and that's what we aim to do. So we've made some adjustments on grocery pricing the last fall on certain key items in our conventional format.

So, we have to be competitive and give value in all of our formats, that's what the stores are demanding and right so. There is no huge shifts in spending in – I would say last three quarter, as it's basically more of the same.

The good news is we're well positioned with both banners in both markets to capture the consumer and all it's, hopefully all its needs. So, not much more I can say.

And just in terms of consumer trade down, are you continuing to see higher penetration of sales on promotion, higher private label, maybe some trading down within categories?

Again it's high on promo as it's pretty much always been. So, I would say it's pretty much the same, maybe slightly up, but not a material change in our promo penetration.

Private label continues to do well especially on the discount side. Where its' mostly a price entry product, so they tend to obviously perform better in discount channel.

But again, we – it's not new. It's pretty much consistent with what we've seen over the past few quarters and even I would say years.

It's pretty much the same.

That's right. And just one final one if I may, just to be very clear, you are seeing positive same store sales performance in both discount and conventional?

We don't disclose by banner that out, but the short answer is, yes. I'm not going to give you by market by this, but yes, we're able to get positive same-store sales.

Thank you very much.

Yeah. Just going to stay on the same track I guess generally speaking.

So with respect to the conventional segment, you talked about starting to invest last fall and selectively taking prices down I guess relative to discount. Has that shifted from, say the problem to go back into the problems of Ontario for you, over the last six months?

Again, I won't give you price strategies by province, by banner. I'm just saying some KPIs, some key products on the grocery side and convention, we just did and changed a bit of our strategy to reduce the gap and did little less promo on certain of these products to offer a better day value, and that strategy or that initiative was – I'm not going to comment by banner by province, but it was in our conventional formats, and I'll leave it at that?

So, Eric, I assume that what we're watching is this above average inflation not just over the last six to nine months, but obviously for a few years now as Canadian dollar has been very weak. We're just going to watch somewhat natural progression hopefully rational and balanced of a bit of a give back to allow the consumers wallet to get back in balance since they are watching gas prices tend to move back up?

When we get to the Canadian dollar presumably at some point actually being a deflationary component on imported product, is the strategically typically, it's no typical, but to hold the line on those prices or to pass that savings on to the consumer?

We will remain competitive and we will offer value to our customers. So, format by format, market by market, we will have competitive prices and we will give back to our customers at the market, they don't play well.

Meat for example, unless, remind cost have come down and prices have come down accordingly. Our slight deflation in meat products in the last quarter is because we took prices down getting good cost or lower cost, we're lowering the price for customers, so on the regular prices, inside our fliers, and even in some promo items, they came down.

So that's the way a competitive markets works.

And with respect to local produce sourcing, there is a lot of chatter right now about drought conditions and therefore impaired supply on domestic. Are we seeing domestic source prices higher year-over-year in the market place?

Not really. Nothing worth really mentioning.

I don't hear of any big problem in supply of local products, not so far. In Québec actually, we've got an oversupply of strawberries, I can tell you that.

I don't hear of any big problems on sourcing.

And I guess last question just back to the debt leverage target of 2.5 times, any change in from dialog from the debt rating agencies with respect to what kind of leverage number they are comfortable with to protect your investment grade rating?

Well, on a normal run rate, normal business, we could take up to 3. It's not rocket science, but up to 3 would be in good territory, but we prefer 2.5 for us is more well balanced.

Now, if we had a – if we do a major acquisition or major investment, and you could take it up with a plan to show good leveraging that works as well, but run rate, normal run rate 2.5 is very good territory.

Thank you.

Good morning. I just wanted to follow-up on a couple of topics I guess.

In terms of the pricing gap between conventional and the discount, I mean obviously that's been a topic for a while and something you monitor closely, but are you where you want to be on that today, and how does the market shift toward discount affect your approach in conventional be it with the flyer, shelf price or the types of promotions?

So to answer your first question, yes, we are where we want to be on the pricing gap. It's a constant moving piece, but again, to be competitive, we are today where we need to be.

And sorry, the second half was…

In terms of the promotional approach within conventional to…

So, conventional as I said, many times differs a lot more than price. It's the quality, it's the process, it's the service, the technical instance, the convenience, so the natural banner needs to differentiate with all those aspects and be competitive on price and that's what we aim to do.

And I think judging from our good results, I think we're being successful at doing that. So, again we will continue to execute well.

Merchandise well and we will provide very good value, again value being a lot more than price.

Then I guess just in terms of the tonnage, obviously it's accelerated the last couple of quarters. You know what's your view on sort of – I guess how do you look at that tonnage performance across your various markets?

Well, I'm quite pleased with our tonnage performance. I think fresh is driving a good chunk of it, at grocery too.

So, I believe it very favorably, I think that our teams did a great job managing well and offering great value to our customers, which is reflected in the 900 tonnage. So the increased traffic, increased basket equals increased tonnage, and that's what we're able to achieve, so very pleased with that.

And those are relatively consistent across markets and banners?|

I won't go into details.

Understand. Okay, thank you.

Yes. I had a question.

When you look at the U.S. grocers already seemed to be experiencing deflation.

As you look out, do you sort of see the Canadian market headed towards that by the end of the Calendar year?

Well, we don't have a crystal ball, but just if you – just look at FX, it looks like its stabilizing and if you look at the next three months or so, all else being equal, if the dollar stays where it is, and I don't control the currency, but it looks like it could stabilize. So that would point a pretty low inflation.

I don't say deflation. I hope we don't get into overall deflation.

That wouldn't be necessarily good. But further out, it's hard – it's really hard to say.

And just in terms of the sectors, would the main difference between Canada and U.S. just be dairy, eggs and poultry, when it comes to regulated markets, is that about it?

Well, that's one key difference. Do they source, all of it in the U.S.

on that fresh side versus us, I can't really answer it, with a certainty Keith.

And just on the basket at discount versus conventional, is the mix is the mix of center of store and the fresh similar or almost the same or is it skewed in one of them versus the other?

Well again, for competitive reasons we don't want to disclose our sales ratios that center store versus fresh is not that different, but there are some differences. So again, I don't want to say more for competitive reasons.

And just on the capital budget, the $350 million next year and 12 new stores, are you able to speak to the net square footage you're expecting to add next year or the type of stores you're planning to open?

Well, it's a mix of discount and conventional, around 1% net square footage would be a number we're working with. There is always some conversions in there, which don't really add square footage.

So again, moderate square footage growth, but continuous consistent investment in our network as we've always done. And then on the Metro side, that's mostly renovations, on the discount side we see more new store openings.

So, I think that's the right way to go, and you'll have a couple of new Metros too.

The replacement Metros are new?

Well, actually, there is going to be two in Ontario that that are going to be new, one Downtown Toronto and one in Windsor, so those are new stores.

And in terms of your capital budget in fiscal 2016, do you anticipate getting fairly close to the $350 million?

Yes.

And then just finally on new formats, are you – I know you look at adjustments all the time, but do you sort of see any room for any new store format to test or try?

Well, I think it's more an evolutions and revolution and brand new concept. We have – we call them the conventional and the discount, but within each we have various types of stores and sizes of stores, so be it Metro or Super C and Food Basics, we can have smaller urban footprints, we can have larger suburban, we can have mid-size, and within these different sizes we adjust the offer to the local market.

So, it's more along those lines than starting in new format. That's how we are going to market.

Thank you.

Thank you.

Hi. Thanks for taking my questions and congratulation on these results.

I'm just hoping to get your thoughts on a few simple questions here. I think I know your answers, but your investments in WOW stores, given the shift of the consumers more toward discounts, does that make incrementally, is that still as attractive as it was call it a year ago to you?

So we continue to invest to build WOW stores. We are picky on where we will invest.

They cost a quite a bit of money, so we want to make sure we get the returns, so we are so we are disciplined about where we invest and how much we invest. So, not every Metro store will become a WOW store, but we will invest to make sure it's a nice sparks and up-to-date, modern.

So we have about 20 WOW stores in both markets today. That will continue to grow, but it's not a – every store is not going in that route.

So we will have some more, but with discipline we will be doing more renovations that will incorporate some of the WOW concepts without making the huge investment in every store that you see in terms of the WOW stores. So pleased with the results, discipline about the future investments and we will continue.

Is the runway for WOW stores are you nearing end of that runway?

Well, I would call it two-thirds, half there.

Okay. And just wondering about the ongoing switch to discount stores or converting conventional stores to discount stores when market conditions change.

Is that still very much in the plan and is there a lot of opportunity for them in future?

There is some. Every year we convert a couple of stores, but it's not a wholesale change.

We are not shifting away from conventional to discount in a big way. It's again market-by-market, where the stores that are suited for a discount format in a local market, we convert.

So we did one in Bracebridge, Ontario this spring, we'll do a couple of Metro is going to Super C this fall, but it's on a regular pace I will call it.

Okay. And just generally, when you convert a conventional to discount store, do you shrink the size of those boxes as well typically?

What are the major initiatives involved in converting?

Typically the box stays the same size, all service departments are taking out, store is basically refurbished, rebuild inside the box. So, basically end up with the new store at somewhat reasonable cost that are $2 million to $3 million is the CapEx basically to convert a stores, depending on store size, age and other factors.

So it's a significant investment, but an investment in our analysis pays off, so again store-by-store, market-by-market where it pays, where it's the right strategy long-term, that's what we do.

Okay. And in addition to CapEx, are the charges related to changing labor contracts?

Well again, I won't comment on this specific. Yes, there can be agreements or markets where we have an agreement where there is a severance component that we offer to employee to stay at a different rate or to leave with a severance.

So that's part of the collective bargaining agreement affecting those stores, so I won't give you a general rule, but there can be yes other charges.

Okay. Thanks very much.

Thank you.

Yeah. Thank you for taking my question.

I actually don't have a question on the quarter, it's pretty straightforward. Just on Adonis and the Griffintown Store, it looks pretty terrific and so far when I've see it, it's has been pretty busy.

I was quite curious about whether you had any concerns initially about the fact that it is located on the second floor or because it's so visible to the street, is that kind of overcome, because typically one doesn't like to locate a store on the second floor.

Yeah. We would have preferred to be on the ground floor, rents in that district are very high, so we are where we are, and so far so good.

We are happy with the earning results in the middle of summer downtown and even with that results are very encouraging pretty good. So yeah, the store came up well.

It's a good concept. Its draws from pretty far, so yeah, we are pleased with the Adonis partnership and the format.

So looking for more of those, but it's a new thing for us to be on the second floor, to be honest.

I thought, so yeah.

It has challenges and we'll see, we'll monitor closely and we'll see where that goes, but our preference is still is to be on the ground floor.

Well, you got the Brunet on the ground floor because it's smaller square footage. Thanks, Eric.

Thank you.

Hi. Thanks.

Just one additional question, when you think about on average, your business is in discount and conventional formats. How in different are you or at all between the incremental basket of goods being bought between one store or the other in terms of profit contribution?

Again, we don't disclose profit contribution obviously for obvious reasons. But again, using a disciplined financial approach, we get the best format for each location giving us a better topline and the better bottom line.

Sorry for being vague and basic, but that's how we do it.

Okay, great. I had to try.

Thank you.

Thank you.

Thanks, Jessa. Thanks for joining us today, and our fourth quarter results will be published on November 16th of this year.

Thank you.