Tougher times for our small listed supermarket sector?
Metcash shares took a hit for a second day as investors and analysts gave the interim results and second half outlook the thumbs down.
After dropping 5% on Monday, Metcash shares fell nearly 9% yesterday as investors took the results and cloudy outlook to mean that the company said it sees more tough times ahead in the supermarket sector.
Metcash is the IGA and Foodland supplier, as well as a major independent liquor business and the second biggest hardware operator after Bunnings.
Its shares were down 7.2%, to $2.44 at the close yesterday.
Tuesday’s drop was the biggest for Metcash since the 17.%t fall that followed its May 28 announcement that a major South Australian customer would not be renewing its contract at the end of the 2019 financial year.
The loss of the contract forced Metcash to make a $352 million impairment in 2018 full-year results, leading to a $149.5 million loss.
The company on Monday reported a 3% lift in first-half profit and CEO Jeff Adams told investors there is little relief on the horizon for players in a supermarket sector dominated by Woolworths and Coles, and facing pressure from the expansion of Aldi.
Metcash’s hardware division could also begin to feel the pinch from the softening property market, Mr. Adams said.
And Coles is feeling the pinch as well – shares in the recently spun-off giant hit a low of $11.40 yesterday, against the listing price last month (after the spin-off from Wesfarmers) of $12.75.
Its shares are down over $1 in the past week.
Shares in Woolworths, the sector leader, were down 0.8% at $28.92.
