Annual Information Form

Financial year ended September 30, 2023

Unless the context indicates otherwise, the use in this Annual Information Form of the terms "our", "we", "us" "METRO" and "Corporation" collectively refers to Metro Inc., its subsidiaries and partnerships, or, depending on the context, to one of them, and the term Metro refers to the stores operated under the Metro and Metro Plus banners.

All disclosures in this Annual Information Form are as of September 30, 2023 unless otherwise indicated. METRO's public disclosure documents referred to from time to time in this Annual Information Form are incorporated by reference and may be found in their entirety on the System for Electronic Document Analysis and Retrieval ("SEDAR+") (sedarplus.ca) or on METRO's corporate website (corpo.metro.ca).

Unless stated otherwise, all amounts set forth herein are expressed in Canadian dollars. This Annual Information Form pertains to the 53-week fiscal year of the Corporation ended on September 30, 2023, unless stated otherwise and except for information in documents incorporated by reference that have a different date.

Forward-Looking Information

Throughout this annual information form (the "Annual Information Form"), different statements have been used that could, within the context of the regulations issued by the Canadian Securities Administrators, be construed as being forward-looking information. In general, any statement contained in this Annual Information Form, which does not constitute a historical fact, may be deemed a forward-looking statement. Expressions such as "continues", "will", "intends", "considers", "should", "expects", "plans", "believes", "projected", "aimed" and other similar expressions as well as the use of the future or conditional tense are generally indicative of forward-looking statements.

The forward-looking statements contained in this Annual Information Form are based upon certain assumptions, that we believe were reasonable as of December 8, 2023, regarding the Canadian food and pharmacy industries, the economy in general, our annual budget as well as our 2023 action plan and financial results for the 2023 financial year.

Risk factors that could cause actual results or events to differ materially from our expectations as expressed in, or implied by, our forward-looking statements are described and discussed under the "Risk Management" section on pages 33 to 37 of the Corporation's 2023 Management's Discussion and Analysis and Consolidated Financial Statements (the "2023 Annual Report").

The forward-looking statements contained in this Annual Information Form do not provide any guarantee as to the future performance of the Corporation and are subject to potential known and unknown risks, as well as uncertainties that could cause our financial position, financial performance, cash flows, business or reputation to differ significantly. Additional risks and uncertainties that we currently deem to be immaterial may also prove to have a material adverse effect. The Corporation believes these statements to be reasonable and relevant at the date of publication of this Annual Information Form and to represent its expectations. The Corporation does not intend to update any forward- looking statement contained herein, except as required by applicable law.

METRO INC. - 2023 Annual Information Form

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Background

With a history going back to 1947, METRO is a leader in the food and pharmacy retailing industry with more than 1,600 retail outlets in Canada and annual sales of more than $20 billion.

Proudly founded in the province of Québec, we are a Canadian company governed by the Business Corporations Act (Québec). Our shares trade on the Toronto Stock Exchange ("TSX") under the symbol "MRU". As of September 30, 2023, we had a total market capitalization of $16,129,154,051.

Our business risks are discussed in our 2023 Annual Report, on pages 33 to 37, and the relevant section on risks of said 2023 Annual Report is incorporated by reference in this Annual Information Form. Our 2023 Annual Report is available on SEDAR+ (sedarplus.ca) and on our website (corpo.metro.ca).

The following graph highlights the key events in the Corporation's history:

Incorporation

The Corporation is currently governed by the Business Corporations Act (Québec) and results from the amalgamation of Métro-Richelieu Group Inc. and United Grocers Inc. on April 30, 1982. The name of the resulting company was Groupe des Épiciers Unis Métro-Richelieu Inc.

Métro-Richelieu Group Inc. was incorporated under the name Magasins LaSalle Stores Limited by letters patent dated December 22, 1947 under the Companies Act (Québec). The Corporation changed its name multiple times before adopting the Métro-Richelieu Group Inc. name in 1979.

United Grocers Inc. was incorporated under the Companies Act (Québec) by letters patent dated August 31, 1928.

After the amalgamation of Métro-Richelieu Group Inc. and United Grocers Inc. on April 30, 1982, Groupe des Épiciers Unis Métro-Richelieu Inc. changed its name twice: once by certificate of amendment dated September 25, 1986 from Groupe des Épiciers Unis Métro-Richelieu Inc., which name it had used since the amalgamation on April 30, 1982, to Métro-Richelieu Inc., and a second time by certificate of amendment dated January 26, 2000, to its present name.

The share capital of the Corporation is composed of an unlimited number of common shares and an unlimited number of preferred shares. The Corporation's previous dual-class share structure was eliminated on February 1, 2012 by certificate of consolidation. All the issued and outstanding Class B multiple-voting shares of the Corporation at the time were converted into Class A subordinate-voting shares (one vote per share) on a one-to-one basis. The subordinate-voting shares were then designated as common shares. The Corporation also then amended its ticker symbol from "MRU.A" to "MRU" to reflect the elimination of its dual-class share structure.

The Corporation's head office and principal place of business is located at 11011 Maurice-Duplessis Boulevard, Montréal (Québec) H1C 1V6.

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METRO INC. - 2023 Annual Information Form

Our subsidiaries

Metro Inc. is a holding company which carries on its business through its subsidiaries and affiliated entities. The following table lists the Corporation's main subsidiaries and affiliated entities, the province in which they mainly carry on their activities and the jurisdiction under which they are incorporated or organized. All of our subsidiaries and affiliated entities were wholly-owned as of December 8, 2023.

Jurisdiction of incorporation

Québec

Metro Richelieu Inc. ("Metro Richelieu")

Canada

McMahon Distributeur pharmaceutique Inc. ("McMahon")

Canada

Metro Québec Real Estate Inc.

Canada

Adonis Group Inc. ("Adonis Group")

Canada

Phoenicia Group Inc. ("Phoenicia Group")

Canada

Première Moisson Group Inc. ("Première Moisson Group")

Canada

Metro Manufacturing Group Inc.

Canada

Metro Brands G.P.

Québec

The Jean Coutu Group (PJC) Inc. ("Jean Coutu Group")

Québec

RX Information Centre Ltd

Canada

Pro Doc Ltée ("Pro Doc")

Québec

Ontario

Metro Ontario Inc. ("Metro Ontario")

Canada

Metro Ontario Pharmacies Limited

Canada

Metro Ontario Real Estate Limited

Canada

METRO INC. - 2023 Annual Information Form

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About our company

With annual sales of more than $20 billion, METRO is a leader in the food and pharmacy industry in Québec and Ontario. As a retailer, franchisor, manufacturer and distributor, we operate a network of a total of 983 food stores and 640 drugstores and supply more than 320 neighbourhood grocery stores.

As at September 30, 2023 and September 24, 2022, METRO, its franchisees and affiliated retailers, operated under the following principal banners and in the following locations:

Food

983 food stores

2023

2022

Québec

Supermarkets

703

Metro

75

77

Metro Plus

120

119

Adonis

11

11

Discount stores

Super C

103

99

Neighborhood stores

Marché Richelieu

51

53

Marché Ami

319

314

Specialty stores

Première Moisson

22

23

Les 5 Saisons

2

2

Ontario

Supermarkets

280

Metro

131

130

Adonis

4

4

Discount stores

Food Basics

144

142

Specialty stores

Première Moisson

1

1

Pharmacy

640 pharmacies

2023

2022

Québec

PJC Jean Coutu

326

326

526

PJC Santé

36

39

PJC Santé Beauté

21

21

Brunet

70

70

Brunet Plus

49

49

Brunet Clinique

21

21

Clini Plus

3

6

Ontario

PJC Jean Coutu

8

8

86

PJC Santé

1

1

Metro Pharmacy

47

46

Food Basics Pharmacy

30

30

New

PJC Jean Coutu

18

18

Brunswick

PJC Santé

2

2

28

PJC Santé Beauté

8

8

It is important that METRO ensure that its supply chain works efficiently and that goods and information flow effectively between the various suppliers and its distribution centers and, ultimately, the stores. METRO continuously evaluates its supply chain, including methods of distribution, facilities, technologies, modes of transportation and relations with suppliers and, when appropriate, implements changes to its supply chain infrastructure to ensure a continued, cost-efficient supply system.

METRO's activities are not dependent on a single customer or a small number of customers. It holds sufficient inventories to ensure product availability. METRO maintains business relationships with a large number of national and regional suppliers. It is not dependent on any one of these third-party providers.

METRO also strives to source its products in a responsible way. Additional information on METRO's Responsible Procurement Framework can be found in the "Corporate Responsibility" section on page 12of this Annual Information Form.

Our food division

Our activities in the food retail industry are located in the provinces of Québec and Ontario.

Each store is either operated by one of the Corporation's subsidiaries (Metro Richelieu, Metro Ontario, Adonis Group or Première Moisson Group), by a franchisee or by an affiliate retailer under a franchise or an affiliation agreement, as applicable.

The majority of METRO's food retail network is serviced by four (4) warehouses owned by METRO which ensure procurement and storage of grocery products, general merchandise, non-perishable goods and certain dairy products. It also operates nine (9) warehouses for the procurement and storage of meat, frozen foods and produce for all of the stores as well as products for the supply of neighbourhood grocery stores.

Metro Manufacturing Group Inc., which started its operations in June 2020 under the name Cusine Centrale Prêt-à-Manger Inc., produces a selection of ready-to-eat meals, salads and dips for various food stores.

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METRO INC. - 2023 Annual Information Form

The Adonis stores are operated by Adonis Group and supplied by two (2) distribution centers operated by Phoenicia Group and by certain METRO distribution centers. Adonis Group also distributes a selection of products under the Adonis brand in several of METRO's food stores and Phoenicia Group also distributes products under its Cedar brand in these stores.

Each Première Moisson store is either a corporate store operated by Première Moisson Group or is a franchised or affiliated store operated by a franchised or affiliated retailer. All 23 Première Moisson stores are supplied by two (2) food preparation plants owned by Première Moisson Group. Première Moisson Group also distributes a selection of products under the Première Moisson trademark in several of METRO's food stores. The Première Moisson products include ready-to-eat products, pastries, pies, breads and cakes.

Our pharmacy division

Pharmacy network

The Corporation's activities in the pharmacy retail industry cover a wide-ranging territory, which includes the provinces of Québec, Ontario and New Brunswick.

In Québec, the Corporation's pharmacy retail activities are franchise based. Its subsidiary Jean Coutu Group acts as franchisor and wholesaler for all drugstores operating under the PJC banners. 420 drugstores are operated under the PJC Jean Coutu, PJC Santé and PJC Santé Beauté (collectively the "PJC banners", and the expression "PJC drugstores" shall collectively refer to drugstores operated under the PJC banners) in the provinces of Québec, Ontario and New Brunswick and more than 25,000 employees work in the pharmacy retail network. The Jean Coutu Group is the largest pharmacy chain in Québec. Its activities mainly include: franchising, wholesaling and drug distribution.

In addition, METRO's subsidiary, McMahon, acts as franchisor and wholesaler for all Brunet drugstores. 143 drugstores are operated under the Brunet, Brunet Plus, Brunet Clinique and Clini Plus banners (collectively the "Brunet banners", and the expression "Brunet drugstores" shall collectively refer to drugstores operated under the Brunet banners).

In Ontario, the Corporation's pharmacy retail activities are either corporate or franchise based. Some of METRO's stores located in Ontario, which are operated by Metro Ontario under the Metro and Food Basics banners, have full in-store pharmacy services. These drugstores are operated under two (2) banners, namely Metro Pharmacy and Food Basics Pharmacy. The Jean Coutu Group also acts as franchisor and wholesaler for the PJC drugstores in Ontario.

In New Brunswick, METRO has a strong presence through 28 drugstores operating under the PJC banners which are operated by the franchised drugstore owners affiliated to the PJC banners.

During the last fiscal year, METRO operated two (2) distribution centers that supplied a major portion of its pharmacy retail network. The Jean Coutu Group operates these two (2) distribution centers which service all of the PJC bannered and acts as a sub-contractor to McMahon to service the Brunet pharmacies.

Distribution of generic drugs

The Corporation, through its subsidiary Jean Coutu Group, owns all the shares in Pro Doc, a generic drug distributor located in Laval, Québec, that is mostly involved in the wholesale distribution of generic drugs. Pro Doc owns a portfolio of approximately 119 generic molecules and 352 different products. These products are sold under the Pro Doc trademark. The generic drugs distributed by Pro Doc are exclusively sold in Québec, mainly to the Jean Coutu Group and to McMahon.

Our products, brands and services

METRO's retail network meets customer needs by offering friendly stores, a personalized service and a wide range of quality products at very competitive prices.

Our private brands

METRO owns several private brands, including Irresistibles, Selection, Our Harvest Best, Lucky Koi and Life Smart, currently offered in most of its stores. Other private brands such as Adonis and Phoenicia, are offered in Adonis stores and select Adonis products can be found in Metro, Super

METRO INC. - 2023 Annual Information Form

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C, and Food Basics stores. Premiere Moisson stores offer a wide selection of products under the Premiere Moisson brand which are also available in Metro, Super C, Adonis and Food Basics stores.

The PJC drugstores carry more than 3,800 private label products. The Jean Coutu Group's private label offer includes a wide range of beauty and cosmetic products, over-the-counter medications, and personal care products, all sold under the Personnelle brand. The PJC drugstores also carry a selection of exclusive brands.

METRO's private label Irresistibles and Selection products are also sold in the PJC drugstores. Select Personnelle health and beauty products as well as over-the-counter medication are also sold in Brunet drugstores, Super C, Metro and Food Basics stores.

METRO's private brand products were honoured in 2023 with 17 awards for their innovation, design and recipes, including 11 Canadian Grand Prix new products awards, two (2) Vertex awards, one (1) Grand Prize Dux and three (3) Private Label Manufacturers Association awards.

Product development

METRO, through its marketing research and consumer intelligence department, analyzes consumer habits and needs. In addition, METRO works in collaboration with several partners, including Dunnhumby, XTC and Nielsen IQ to develop and implement strategies aimed at better meeting customer needs and building long-term loyalty.

This year, METRO continued to improve its product offer in store and to focus more on customer experience and innovation. METRO's teams are constantly seeking out innovative products as well as developing new in-store merchandising concepts. It has a department dedicated to customer experience whose mission is to define and implement a distinctive shopping experience in its Metro stores.

METRO completed this year the launch of more than 350 new private brand products in grocery, 150 new private brand products in pharmacy and made improvements to more than 1,350 existing products, whether in terms of packaging, costing or recipe including sodium reduction and other recipe enhancements. Instructions for sorting materials for recycling now appears on the packaging of more than 1,900 products. METRO has also launched more than 83 new healthy and sustainable products under the Selection, Irresistibles, Life Smart Mieux-être,Life Smart Mieux- être Naturalia, Life Smart Mieux-êtreplant based, Life Smart Mieux-êtreOrganic, Selection Eco and Personnelle Baby brands.

Loyalty programs

Loyalty programs offered by METRO allow us to reach and reward around 4.3 million customers across Québec, Ontario and New Brunswick.

In Québec, METRO launched its MOI program, an evolution of the metro&moi program, in May 2023 across the banners Metro, PJC ,Super C, Brunet and Première Moisson banners. The MOI program is also available in the PJC pharmacies in Ontario and in New-Brunswick. The MOI loyalty program allows consumers the opportunity to collect points that can be applied towards purchases in the participating stores. This program allows METRO to build customer loyalty through the development and implementation of consumer-focused strategies, while being even more competitive, and to solidify the Corporation's relationship with its customers by better meeting their health and wellness needs through a simple, generous and accessible program.

The Air Miles® Reward Program is offered to customers of the Metro banner throughout Ontario. This program offers customers of the Metro banner the possibility to accumulate Air Miles®, discounts and other loyalty rewards, while providing METRO with increased customer loyalty and insight into customer buying habits as part of an overall customer relationship management strategy.

All Metro banners have personalization and communication tools such as mobile applications, personalized communications and newsletters which allow customers to receive regular communications and relevant offers, adapted to their needs.

Digital platforms

In 2023, METRO continued to expand its online grocery services, in particular in the Ontario market and through the expansion of the pickup service for Super C stores. Having entered into a partnership with Instacart in 2022, METRO continued to deploy this on-demand online grocery service at Super C, Adonis and Food Basics. The online grocery service is now available at Première Moisson via Uber Eats. The Food Basics banner was added to Uber Eats, extending its delivery services in Ontario. The pickup service continued to expand in 2023 and is now offered in 231 Metro stores, 83 Super C and nearly 300 PJC drugstores.

METRO also redesigned and launched five (5) new omnichannel websites and mobile applications (metro.ca, Metro app, superc.ca, Super C app and programmemoi.ca), in addition to working on the launch of two (2) other websites scheduled for fiscal 20241. We have also integrated the single sign-on authentication to the MOI program in the applications of participating banners. A warehouse management system was installed in the dedicated online grocery store.

The Jean Coutu Group has developed, through its subsidiary, Rx Information Centre Ltd, a proprietary pharmacy workflow and prescription management information system which is used in nearly all drugstores operating under the PJC and Brunet banners. This system is designed to enable an efficient workflow process that optimizes pharmacy services through fast prescription filling, verification of quality control, reduction in filling errors, reduced risks of adverse drug interaction, examination of workflow data, documentation and monitoring of patient records, and maximization of the availability of high-demand prescription products. The system also allows patients to use, on request, any PJC or Brunet pharmacy (with the exception of pharmacies located in Ontario) to renew or transfer their prescriptions.

Patients also benefit from digitalized access to their services through the Jean Coutu and Brunet web and mobile platforms on which they can book appointments as well as consult and manage their Health Record, and when appropriate, their family's. The Health Record contains, among other things, copy of patients' prescriptions as well as information on medications. Using the electronic platforms, patients can transmit a new prescription, renew a prescription, download tax statements, and monitor health indicators such as blood glucose, blood pressure and weight.

METRO continues to focus on improving the overall experience for its customers across all digital platforms, including the PJC and Brunet's mobile applications. The Jean Coutu Group, in partnership with MedMe Health, has launched an online consultation platform. This initiative enables PJC drugstores to offer video consultations to their patients, and to collect information via digital forms.

  • See the "Forward-Looking Information" section on page 1 of this Annual Information Form.

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METRO INC. - 2023 Annual Information Form

Banner services

METRO's banner networks are structured to meet specific consumer needs. Each one presents a consistent image to the public and is supported by specialized technical support services.

METRO offers a range of services to affiliated retailers and franchisees operating under the Metro, Metro Plus, Première Moisson and Marché Richelieu banners as well as to neighbourhood stores such as Marché Ami. Many of these services are invoiced directly to their users in order to ensure their self-financing. The services include merchandising, marketing and advertising programs as well as retail accounting and data processing, store layouts and equipment, insurance programs and other analysis and advisory programs. Overall, these products and programs reflect METRO's objective to offer these retailers a comprehensive, high-quality service. METRO also offers these retailers a range of commercial programs, as well as rebates and loyalty incentives, all of which are competitive in the food industry. Metro Richelieu and Metro Ontario generate revenues from the sale of products to the retailers, most of such products being delivered from their distribution centers, and from services rendered to them.

The franchised owners of the PJC and Brunet drugstores own their businesses and are responsible for managing their stores and layout, and for funding their inventory. The Jean Coutu Group and McMahon generate revenues from royalties, based on a percentage of drugstore sales, and from the sale of products to the franchised drugstore owners, mainly delivered from the Jean Coutu Group's two (2) distribution centers, and from services rendered to such franchisees. The Jean Coutu Group and McMahon each provides several other services to their franchised drugstore owners, which may include centralized purchasing, marketing, training, human resources, operational consulting, information systems, and private label programs.

METRO grants the right to operate under any of its banners at its sole discretion. Retailers who wish to operate under one of METRO's banners must first meet certain criteria. Most banner retailers are bound by various agreements with METRO.

Intellectual property

METRO uses and has exclusive ownership of several trademarks and trade names. Its principal banners, which are all trademarks owned by METRO, are Metro, Metro Plus, Super C, Food Basics, Marché Richelieu, Marché Ami, Adonis, Première Moisson, PJC Jean Coutu, PJC Santé, PJC Santé Beauté, Brunet, Brunet Plus, Brunet Clinique, Clini Plus, Metro Pharmacy and Food Basics Pharmacy. Its main private label products are identified by the following trademarks, among others: Irresistibles, Selection, Personnelle, PJC, PJC Délices, Adonis, Phoenicia, Cedar, Première Moisson and Pro Doc. METRO takes appropriate measures to protect its intellectual property including registering same with the intellectual property authorities.

Competitive environment

The food and drugstore industry in Canada is highly competitive, but METRO continues to work to increase its market share1, including by carefully selecting sites for future stores, actively focusing its dynamic marketing efforts on consumer needs, and modernizing its stores, information systems, distribution facilities and digital platforms. METRO's retail network competes with local, regional, national and international businesses, including independently owned drugstores and supermarkets, mass merchandisers, warehouse clubs, online retailers, discount stores, convenience stores and other specialty chains, groups and banners.

Seasonality

Other than certain holiday periods in the year that correlate with higher sales, there is no significant seasonality factors affecting METRO's business.

Regulations

METRO's operating activities require certain government permits and licences. In particular, METRO holds licences and permits for the sale of alcoholic beverages, tobacco, lottery tickets and for the distribution of pharmaceutical products and medical devices. METRO believes that it holds all licences and permits required for the proper conduct of its activities in accordance with the law. Moreover, METRO sells or distributes certain food and health products which are subject to price regulation, such as prescription drugs, milk, beer and wine.

Loan operations

The Corporation does not have any loan operations. However, in the normal course of its business, situations may arise where METRO grants loans to various parties, including to its retailers.

Risk factors

The risk factors that may affect the Corporation are described on pages 33 to 37 of the 2023 Annual Report under the "Risk Management" section.

Our people

As at September 30, 2023, METRO employed directly approximately 46,013 people, 37,428 of whom were governed by 164 collective agreements. If we add to this number, the structured entities', this number goes up to approximately 54,798 and this represents the number of employees for whom wages and fringe benefits are accounted for at note 18 of the Consolidated Financial Statements on page 73 to 77 of the Corporation's 2023 Annual Report. This number amounts to approximately 30,685 full-time equivalent employees as 63% of METRO employees are part-time employees. These positions are most often found in the stores and are frequently first-time jobs for people who are entering the job market for the first time. Throughout its network, METRO provides employment to more than 97,000 people.

  • See the "Forward-Looking Information" section on page 1 of this Annual Information Form.

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During the last financial year, METRO negotiated and renewed 33 collective agreements covering 3,420 employees. These agreements were in effect for periods ranging from 34 months to 85 months and will expire between December 31, 2025 and December 31, 2029. As at September 30, 2023, six (6) collective agreements covering 12,770 employees had expired and were or were soon to be under negotiation. Over the next financial year, 27 collective agreements covering 2,659 employees will expire. Finally, 98 collective agreements will expire between October 5, 2024 and March 25, 2030. These collective agreements cover 18,579 employees.

METRO considers1 its labour relations to be satisfactory.

With respect to METRO's employees' participation in pension plans, most of the employees participate in multi-employer pension plans. For accounting purposes, these plans are considered as defined contribution plans and are not administrated by METRO because said plans cover employees of a number of different corporations.

The remaining portion of METRO's employees either participate in defined contribution pension plans or in defined benefit pension plans. By law, the administration of all Québec employees' pension plans is the responsibility of each plan's respective pension committee. In Ontario, these plans are administrated by METRO or by a board of trustees.

The investment policies of the above plans are reviewed annually in order to ensure that the asset allocation is appropriate.

The liabilities associated with the defined benefit pension plans represent a small portion of the Corporation's market capitalization and compares favourably to other public corporations.

  • See the "Forward-Looking Information" section on page 1 of this Annual Information Form.

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METRO INC. - 2023 Annual Information Form

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Metro Inc. published this content on 18 December 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 19 December 2023 14:09:14 UTC.