Metcash has delivered a net loss of $152 million in its half-year results, despite liquor delivering its sixth consecutive year of earnings growth.
The result was impacted by $249.3 million impairment due to the loss of the 7-Eleven contract, as well as Drakes Supermarkets in South Australia and the introduction of a new accounting standard.
However, liquor EBIT increased by $0.5million to $29.6million, while total sales (including charge-through) increased 1.7% to $1.8billion.
Jeff Adams, Group Chief Executive Officer, said: “We expect market growth over the remainder of FY20 to continue to be influenced by the ‘premiumisation’ trend (higher quality but lower consumption).”
“The business is continuing to progress its growth initiatives under the MFuture program with opportunities in private and exclusive label, the ‘on-premise’ market and digital being prioritised under the new Liquor CEO.”
Former Pinnacle Drinks Director Chris Baddock was announced as the new CEO of Metcash Liquor in 2018 and joined the company earlier this year.
Before Pinnacle, Baddock spent 11 years with Lion, during which time he was the Managing Director of Fine Wine Partners.
In private label, additional SKUs were added across the wine, beer and spirit categories in the half. There were a total of 90 SKUs in the category at the end of HY20.
Sales of private label wine continued to grow, increasing 20% on HY19. Adams said private label wine accounts for 5% of total IBA wine sales and “provides a significant growth opportunity”.
Porters leads premium push
Adams noted there had been an increase in wholesale sales to contract customers and non-bannered stores, plus an increase in ‘on-premise’ sales, while the national rollout of Porters Liquor was “gaining momentum”.
Porters is in the midst of a three-year national roll-out program to grow Metcash’s share of the premium/higher value market.
Total stores in network at end of HY20 increased to 25, mostly in NSW. New stores were opened in Balmain East and Glebe, while the first Victorian
store opened at Moonee Ponds (above).
Expansion into WA and Tasmania is planned for the second half of 2020, while a total of 10 stores are expected to be added to Porters network in the same time frame.
