Metcash reveals its best performing banners

Metcash released its financial results for the half-year ended October 2021 this week, which showed continued growth for liquor, building on very strong prior comparative period.

Earnings growth in liquor was underpinned by continued strong demand in the retail network, and an increase in on-premise sales in states less impacted by COVID-related restrictions.

Total liquor sales (including charge-through) increased 6.6% to $2.17bn (first half FY21: $2.04billion), and were up 21.9%
compared with the first half of FY20 with strong demand from the IBA retail network and contract customers, as well as increased on-premise sales.

Metcash said the IBA retail network continued to be buoyed by the shift in consumer behaviour and improved competitiveness of its stores, as well as from home consumption substituting for on-premise consumption. Despite the improvement in on-premise sales, customers in this segment continued to be adversely impacted by extended COVID-related
restrictions, particularly in New South Wales, Victoria and New Zealand.

Shearer's Arms Bottl-o

Wholesale sales to the IBA banner group were flat, and increased 24.2% compared with the first half of FY20, with the Cellarbrations and The Bottle-O banners the best performers. Retail like-for-like sales in the IBA banner group increased 6.9%, and were up 27% compared with the first half of FY20.

Ecommerce delivers $100+ basket sizes

The business launched its new branded eCommerce platform in November 2021 for the Cellarbrations and The Bottle-O banners, with DoorDash and UberEats as delivery partners. Pilot stores are now operating with the new platform across the eastern seaboard, with the average basket size of $100+.

The ShopMyLocal platform remains operational, but will be progressively converted to the new branded sites in the second half of FY22.

Liquor EBIT increased $4.2million or 10.5% to $44.3million reflecting the contribution from the increase in sales volumes, which more than offset an increased weighting of lower-margin categories in the sales mix, as well as higher costs associated with the impact of COVID and a tight labour market. The EBIT margin for Liquor was in line with the prior comparative period at 2%.

Group CEO Jeff Adams said: “It has been a very pleasing first half for both Metcash and our independent retailers as we continued to build on the very strong prior corresponding 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.

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

“Importantly, 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. We are also expecting our Food and Liquor pillars to benefit
from a strong Christmas/New Year trading period and their extensive regional presence.”

Outlook for Metcash liquor in 2022

In the first five weeks of the second half of FY22, total Liquor sales (including charge-through) increased 7.6% compared with the same period in the second half of FY21 (+25.8% compared with the same period in the second half of FY20).

Metcash said the significant uplift reflects continued strong demand across retail stores and increased sales to on-premise customers. Sales to the IBA retail banner group increased 3% compared with the same period in the second of half of FY21 (+25.8% compared with the same period in the second half of FY20).

The company said the pillar is continuing to focus on progressing its MFuture initiatives including private and exclusive label,
accelerating the rollout of its online platform, and supply chain flexibility and efficiency.

How COVID-19 gave Metcash its “biggest leg-up in two decades”

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Categories: Business