The retail malaise hit Metcash, the supermarkets, liquor and hardware retail group in the 2018-19 financial year.
The shares responded, falling more than 9% to $2.84 to be the worst performing stock on the ASX 200 yesterday.
Metcash told the ASX its full-year underlying profit fell 3% to $210 million, with earnings growth in its hardware and liquor businesses unable to offset the weakness in its core business – groceries sold through IGA and other independent chains (such as Drakes).
Group earnings before interest and tax fell 1.4% to $330.0 million from 2017-18’s $334 million.
The final dividend was set at 7 cents a share (unchanged from the final a year ago), for total dividends for the year of 13.5 cents a share, fully franked.
The company said on Monday that food sales to IGA, Drakes and other supermarkets fell half a percent in the year to April 3, thanks in part to poor trading in Western Australia.
Like for like sales (same store or comparable store sales) at the IGA fell 0.5% over the year, which was an improvement from 0.9% all last year. But rivals Woolies and Coles will report small rises in their same-store sales for the year to June in the next two months.
Metcash’s said sales to its Home Timber and Hardware and Mitre 10 stores were hit by the slump in housing construction and renovation as well as the loss of a large customer in Queensland and fell 0.9%.
However, earnings from that division grew 17% from cost savings from the integration of its two hardware brands rationalising and closing unprofitable company-owned stores.
Liquor sales in ALM were up 5% and earnings were up 1.3%.
“Further good progress on key initiatives in the second half helped deliver a pleasing financial and strategic outcome for the year,” said Metcash CEO Jeff Adams said in yesterday’s statement.
“Solid earnings and cash flows were again delivered by our pillars despite challenging market conditions, and we continue to be well positioned with a strong balance sheet.”
Statutory net profit after tax for the year was $192.8 million, compared to a $148 million loss last year, which was driven by a $345.5 million in write-downs and goodwill impairment.
