Metcash liquorBusiness

Metcash reports ‘unprecedented’ sales growth

Independent distributor Metcash has posted one of its strongest-ever half-yearly results, with underlying profit after tax increasing 43% to $129.6million and growth in the liquor division up 30.6%.

Strong earnings growth in liquor in HY21 was underpinned by elevated demand in the IBA banner group, which more than
offset the adverse impact of COVID-19 trading restrictions on ‘on-premise’ customers.

Sales to the IBA retail banner group increased 24.1% with strong growth in Cellarbrations, The Bottle-O and IGA
Liquor supported by an increase in customer preference for local neighbourhood shopping, home consumption
substituting ‘on-premise’ consumption and less overseas travel and duty-free sales.

Like for like sales in the IBA retail banner group increased 27%.

Metcash said on-premise customers were at various stages of recovery from the adverse impact of COVID-19 trading

Across the group, combined sales of $7.1 billion for the six months to the end of October represented growth of 12.2%.

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.

“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.

“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.

“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.”

The results were well above analyst expectations, with Goldman Sachs predicting weaker sales growth of 11.5% and underlying profit to be $116 million.

Metcash looks to bigger e-commerce focus

Adams noted during an analysts call that the wholesaler is planning to ramp up its e-commerce presence.

“We’re in the game now when we weren’t before and the retailers are definitely a lot more interested in getting into it,” he said.

“The one thing about coming into it late is it allows you to do a bit of digital leapfrogging. We’ve been able to build our website with some of the latest thinking.” 

Adams said there had been a lack of interest in online shopping solutions among its independent retailers prior to COVID-19.

“We didn’t [have an e-commerce presence] before because it wasn’t widely wanted by the network,” he explained.

A new trial of an e-commerce website under the Cellarbrations banner is being explored in Victoria and the launch of its online marketplace ‘Shop my Local’ was brought forward during lockdown.  

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Categories: Business