Metcash pleased with 1H21 results

Metcash Group revenue increased 1.5% to $8.22bn (including charge-through sales) in the six months to 31 October, with each pillar recording a high level of sales and substantial growth compared to 1H20.

Compared with 1H20, substantial growth was delivered with:

  • IGA Supermarkets up 18.8%
  • IBA stores in Liquor up 27.0%
  • Independent Hardware Group (IHG) stores up 17.7%
  • Total Tools stores up 51.0%.

Group CEO Jeff Adams says it’s been a “pleasing first half” for both Metcash and independent retailers.

“All Pillars again benefitted from the shift in consumer behaviour and improved competitiveness of our retail networks supported by the success of our MFuture program,” he said.

“The preference for local neighbourhood shopping and shift from cities to regional areas helped the independent retail networks deliver like for like sales growth in the half.

“This is a significant achievement given the many challenges in the half including staff isolations, labour shortages, supply chain issues, continuously changing health regulations and other lockdown-related impacts,” Mr Adams said.

Food

While total Food sales (including charge-through) declined 4.9%, compared with 1H20 it increased 4.1% or (16.8% excluding the impact of Drakes’s and 7- Eleven’s concluded supply chain agreements).

Compared with 1H20, Supermarkets sales increased 14.4% (+18.0% excluding Drakes impact). The IGA network is said to have continued to benefit from the shift in consumer behaviour, as well as the success of MFuture initiatives which have helped the retail network retain new and returning customers and significantly increase the average basket size.

Elevated Supermarket sales continued across all states, growth strongest in the states less impacted by Covid-related restrictions (Western Australia, South Australia and Queensland) with sales growth averaging over 15%.

The business invested to accelerate the rollout of its new eCommerce IGA Shop Online platform. The rollout commenced in New South Wales and Victoria, with expansion into Queensland and South Australia to follow. The new platform is currently in around 100 stores and there is a pipeline of around 300 stores signed up, with further rapid expansion expected.

Looking ahead

Metcash Group expects supply chain disruption, and increased Covid-related and labour costs, particularly in distribution centres, to continue to be a risk for all Pillars in 2H22.

There also continues to be uncertainty over the potential impact of any future Covid-related restrictions and changes in consumer behaviour.

However, Mr Adams remains optimistic.

“The strength of our independent retail network continues to improve,” he said. “Retailers remain encouraged about the future and are investing in new stores and refreshes that further improve the quality of the network.”

The sales momentum seen in recent periods has continued into the second half with sales growth recorded in all Pillars in the first five weeks of the half. The Group expects its Food and Liquor pillars to benefit from a strong Christmas/New Year trading period and their extensive regional presence.

“We remain well placed to continue investing in our growth plans under MFuture focused on further improving the competitiveness of our independent retailers,” Mr Adams said.

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