On the face of it a solid start to its 2022-23 financial year for the country’s third-placed supermarkets, liquor and hardware chain operator, Metcash .
The company’s annual meeting on Wednesday was told that Metcash the strong sales momentum from 2022 had “continued in 1H23 in all pillars supported by continued preference for local neighbourhood shopping underpinned by the improved competitiveness of our independent retail networks, and by inflation.”
Inflation has helped lift the value of sales across the business, especially in food, liquor and hardware while the comparison with the same period of 2021-22 looks high because the base last year was impacted by Covid lockdowns and restrictions, especially in major markets such as Sydney and Melbourne.
The impact of the heavy rain and floods this year has lifted the cost of many fresh food items as well compared to a year ago, while higher energy and petrol costs have also skewed this year’s performance higher.
Metcash said group sales were up 8.9% across all its ‘pillars – supermarkets, hardware and liquor.
Food sales increased 4.3% (+6.6% ex-tobacco) reflecting continued strong demand in both the Supermarkets and Convenience businesses, and higher wholesale inflation (Q1: +4.9%)
Supermarkets sales up 3.4% (+5.5% ex-tobacco) reflecting continued strong demand and higher wholesale inflation
Hardware sales jumped 19.5% with continued strong demand in both IHG and Total Tools, acquisitions and the impact of higher inflation (IHG sales +11.7%, Total Tools sales +84.8%)
Liquor sales increased 11.5% reflecting continuation of the recovery in on-premise sales and strong demand from retail stores. Sales were partly buoyed by a higher than normal CPI increase that resulted in strong demand from customers
“In the face of a higher inflationary environment, we have maintained our focus on keeping our independent retailers well stocked and price competitive to support their delivery of differentiated value for shoppers
“We have continued to work closely with our suppliers and independent retailers to help shoppers manage the impact of inflation by providing better value options through offering a wider range of products at competitive prices
“COVID-related costs have started to normalise and there has been some improvement in supply chain challenges, with corresponding improvement in stock and service levels. However, the availability of labour remains very tight
“We are experiencing and managing increased supply chain and labour cost pressures,” Metcash said in an update to the meeting.
Metcash shares edged up 0.4% to $4.414 on a day when the wider market sold off and the ASX 200 finished off 97 points.
