Metcash bounds through first half financial year

December 8, 2020
By Ioni Doherty

When releasing Metcash’s financial results for the half year ended 31 October 2020, Group CEO, Jeff Adams said: “It has been a standout first half for Metcash, with unprecedented sales growth underpinning a significant lift in earnings and cash generation.”

It is growth that has been realised across all aspects of the business: food, liquor and hardware.

He said: “All Pillars have performed exceptionally well, adapting quickly to the many challenges associated with COVID-19 while continuing to successfully execute their strategic initiatives and champion the success of our independent retailers.

 “Our independent retailers delivered strong ‘like for like’ sales growth in the Food, Liquor and Hardware store networks. It was pleasing to see our retailers continuing to invest in growing their businesses, including new stores and refurbishments despite challenging circumstances. We remain committed to supporting this growth.”

Total liquor sales increased 14.3 per cent to $2bn, growth which offset the adverse impact of COVID-19 trading restrictions for on-premise customers.

Sales to the IBA retail banner group increased 24.1% with strong growth in Cellarbrations, The Bottle-O and IGA Liquor. This growth is attributed to consumer trends to shop locally, continued at-home consumption and the dramatic drop in overseas travel and duty-free sales. These trends show no signs of slowing.

Adams said:  “Our retail banner groups are ideally positioned to continue benefiting from the change in consumer behaviour to more ‘local’ shopping, and their improved competitiveness supported by our MFuture initiatives is assisting them to retain new and returning customers to their stores.

“All pillars reported an improvement in their earnings and margins, reflecting the positive operating leverage generated from higher sales despite investing in COVID Safe work practices.”

Expectations are for growth and profitability to continue. This forecast is based on several factors, including the ongoing recovery by on-premise partners, the newly opened distribution facility in South Australia which should make the retailer more competitive and due to the group’s strategic intent and well-resourced position to invest in future growth and innovation, including in the digital space.

Adams said: “I am pleased to report that the Group has had a good start to the second half, with strong sales momentum continuing in all pillars in the first five weeks of trading. We are also expecting strong trading over the Christmas and New Year period.”

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