Metcash has released its half-year results, with CEO Doug Jones describing them as “solid results in tough trading conditions”.
He says this was supported by disciplined operational performance and the successful execution of Metcash’s strategy.
“Importantly, we’ve maintained good momentum in our core business, and our independent networks remain healthy and confident despite the challenging conditions,” he adds.
Group reported revenue for the six months ended 31 October increased 0.1% to $8.5 billion.
Including charge-through sales, group revenue increased 0.4% to $9.6 billion.
Food.
Total food sales (including charge-through and excluding tobacco) increased 7.2% to $4.5 billion.
Including tobacco, total food sales were down 0.8%.
Wholesale sales, excluding tobacco, increased 2.7%, with the rate of growth higher in the second quarter supported by the success of Metcash’s ‘Extra Specials’ promotional program focused on large stores.
The rate of decline in tobacco sales accelerated following the introduction on 1 July of new regulations impacting the legal tobacco market.
Total tobacco declined 35.1% to $637.8 million.
Like-for-like sales, excluding tobacco, in the IGA network grew 1.2% (, which Metcash says reflects the impact of the decline in tobacco transactions on non-tobacco product sales.
10 new IGA stores opened in the half with a further 17 expected in the second half.
9 IGA branded stores closed in the half and 27 were transferred to non-IGA brands with Metcash continuing to supply all 27 stores.
The foodservice and convenience business delivered sales growth of 21.9%, with growth in both Campbells & Convenience and Superior Foods.
Campbells & Convenience sales increased 14%.
Metcash says the acceleration in growth continued to be underpinned by the business’ new growth strategy, supplying all major petrol and convenience operators.
Superior Foods sales increased 27.9%, largely reflecting that the prior corresponding half included sales commencing 3 June 2024.
On an adjusted basis, the increase was 3.4%, with the rate of growth increasing through the half.
Mr Jones says the food business is now “highly diversified and very resilient”.
“Food again delivered earnings growth despite the significant and unprecedented decline in the sales of our largest product category, tobacco,” he says.
“Despite the grocery market being at its most competitive in many years, the IGA network is now more competitive than ever.
“The ongoing pleasing performance in food reflects the success of our core wholesale and logistics functions, improvements made to the IGA network’s value proposition, our investment in Campbells & Convenience underpinning its leading position in supply to the petrol and convenience market, and our expansion in foodservice through the Superior Foods acquisition.”
Liquor.
Total liquor sales increased 1.4% to $2.6 billion, which Metcash notes reflects market share gains in Australian packaged liquor and an acceleration in wholesale sales to on-premise customers.
Total wholesale sales to independent retail and contract customers increased 0.9%.
Beer and RTDs were the strongest growth categories, said to reflect cost-of-living pressures and shopper focus on value.
The first half included renewal of the Liquor Stax contract for a further 10 years and the Redcape Group (54 stores) becoming a member of the IBA retail banner group.
The business also completed the acquisition of Steve’s Liquor Warehouse group in mid-October.
Sorted (Metcash’s digital B2B marketplace) was extended into liquor at the end of the half.
It’s now in Western Australia, South Australia, Victoria, Tasmania and the Northern Territory, and will be in Queensland and NSW from January.
It’s anticipated that around 80% of all customer orders will be through the Sorted platform, helping to drive further growth.
Mr Jones says the benefits of Metcash’s diversified liquor channel strategy led to sales growth in a more difficult market.
“Shopper preference for the convenience, quality and value in the independents’ offer underpinned further market share gains in the half,” he says.
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