Local shopping drives IGA operator Metcash to record half
A COVID-fuelled focus on shopping local has helped independent supermarket distributor Metcash post one of its strongest-ever half-yearly results, with the company’s underlying earnings rocketing up 43 per cent.
The $3.3 billion retailer told investors on Monday a collective move by Australians to preference local independent IGA stores, which Metcash supplies, had helped it record “unprecedented” sales of $7.1 billion for the six months to the end of October, representing growth of 12.2 per cent.
Underlying profit after tax increased 43 per cent to $129.6 million, largely fuelled by the higher volume of sales during the COVID-19 affected period. At a statutory level, Metcash’s earnings jumped 182 per cent to $125.1 million, as the company incurred a $151 million loss in the prior corresponding half due to a swathe of impairments.
These results were well above analyst expectations, with Goldman Sachs predicting weaker sales growth of 11.5 per cent and underlying profit to be $116 million.
Independent supermarkets contribute to the majority of Metcash’s business, with comparable sales across the IGA network jumping 16.4 per cent. Total food sales were $4.8 billion for the half.
However, growth was more significant at the business’ liquor and hardware divisions. Sales at stores such as Cellarbrations and The Bottle-O rose 24.1 per cent, and earnings in the liquor division grew by 30.6 per cent.
Metcash’s Mitre 10 and Home Timber & Hardware stores reported a 20.6 per cent surge in sales, revitalising the division which had been struggling to grow prior to COVID-19. This was aided by online sales, which doubled for the half.
“Our independent retailers delivered strong ‘like for like’ sales growth in the food, liquor and hardware store networks,” chief executive Jeff Adams said.
“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.”
“Our retail banner groups are ideally positioned to continue benefiting from the change in consumer behaviour to more ‘local’ shopping.”
Sales have continued to grow across all of the company’s divisions, with trade in supermarkets up 2.4 per cent, liquor 16.9 per cent, and hardware 25.3 per cent. The company expect summer trade to benefit from more Australians travelling regionally for Christmas and New Years.
Metcash declared an interim dividend of 8 cents per share, a 33 per cent rise on the prior half, payable on January 29.
More to come
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Dominic Powell writes about the retail industry for the Sydney Morning Herald and The Age.
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Source: Thanks smh.com