Metcash, the wholesale giant behind supermarkets, liquor, and hardware, is anticipating tough trading conditions and increasing pressure on consumers as we approach the Christmas season.
Despite these challenges, Metcash’s supermarket sector has shown solid growth since July. However, the growth in food and grocery sales didn’t meet some analysts’ expectations, which led to pressure on the company’s stock performance.
During its annual general meeting, Metcash reported a 3.5% increase in supermarket sales over the past eight weeks. This number drops to a 1.9% decline when including tobacco sales. Wholesale food and grocery inflation sat at 2% for the same period.
Peter Birtles, Metcash’s chairman, addressed investors at the AGM, acknowledging the tough economic climate in Australia. He noted that the current instability is shaking consumer confidence and prompting shoppers to seek out better value. However, he emphasised that Metcash remains in a strong position.
“The current economic environment is challenging, and it continues to weaken consumer confidence,” Birtles stated. “As a result, we expect value-driven shopping habits to persist into fiscal 2025. Nonetheless, our three business divisions remain robust, and we are well-prepared to deliver future growth as we navigate through this economic cycle.”
Birtles reassured investors that Metcash is closely collaborating with both suppliers and retailers to offer a wide range of products at competitive prices. He also praised the adaptability of the company’s retailers in meeting the changing needs of their customers.
The AGM presentation highlighted that food and grocery sales, excluding tobacco, continue to thrive in a market where consumers are focused on value. This strong performance reflects both volume growth and slowing inflation, underscoring the resilience of Metcash’s independent retailer network, which offers a unique and relevant shopping experience.
Metcash’s supermarket sales, which include banners like IGA and Foodland, rose by 3.5%. However, the decline in tobacco sales has been a significant setback, especially as the illegal black-market tobacco trade draws customers away from Metcash’s supermarket retailers, who rely more heavily on tobacco sales than competitors like Coles and Woolworths.
In comparison, Woolworths reported a 3% growth in sales for the first eight weeks of fiscal 2025, while Coles recorded a 3.7% increase during the same period.
In Metcash’s liquor division, which includes retail banners like Cellarbrations and The Bottle-O, total sales increased by 2.7% over recent months.
