Liquor delivers seventh year of growth for Metcash

22 June, 2020 by Andy Young

Metcash has reported its full year results for the year ended 30 April 2020, with a seventh consecutive year of sales growth in the liquor division, part of an overall result which saw group revenue increase by 2.9 per cent to $13bn.

The group said that all its divisions responded well to service retailers in a very challenged environment impacted by both the bushfires and COVID-19. Overall group EBIT decreased by 1.8 per cent to $324.2m impacted by “onerous lease obligations” and ceasing to supply Drakes Supermarkets in South Australia. The company said that after adjusting for these items, group underlying EBIT increased by around $12m.

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Group CEO, Jeff Adams said: “I am pleased to report very admirable results in a year of unprecedented challenges that included the impact of devastating bushfires and the COVID-19 pandemic.

“Our business went to extraordinary lengths to support our employees, our retailer network and local communities in their time of need. This included investing in their safety and wellbeing, in operations to ensure the continuity of supply of essential products, as well as in supporting retailers impacted by COVID-19 restrictions.

“From a logistics perspective, it was pleasing to see how quickly we were able to flex the capacity of our distribution centres to help meet the surge in demand in March and April, particularly in our Food pillar. Our retailer network has a significant presence in regional and remote areas, and is often the only store in town, so it was crucial that we maintained effective supply to these communities”

In terms of the liquor division total sales increased 0.3 per cent to $3.68bn, despite the COVID-19 impact on March and April. Total sales for the 10 months ended February 2020 increased 2.2 per cent, which Metcash said reflected “value growth from the continuing ‘premiumisation trend’ and an increase in on-premise sales”.

The company did say that sales in March and April were “adversely impacted” by the government lockdown of on-premise venues in Australia and New Zealand. This was partly offset by an increase in volumes in the Australian retailer network, both through a brief period of ‘panic buying’ and then higher demand following the closure of on-premise venues.

Liquor EBIT decreased $0.6m, which reflects the impact of the on-premise lockdown in March and April.

Speaking about the liquor results, Adams added: “Our Liquor pillar continued to perform well despite [around] 20 per cent of its business being shutdown in the last five weeks of the financial year due to COVID-19 restrictions.

“The business delivered its seventh consecutive years of sales growth and went to significant lengths to support customers impacted by the shutdowns.

“Significant progress was made on improving our digital capability, with the accelerated launch of online offers including ‘IGA Shop Online’ in Food and ‘Shop My Local’ in Liquor being standout achievements. The speed in which we were able to accelerate and launch these offers is a credit to our Food and Liquor teams.”

He added: “Going forward, we are well positioned with a strong balance sheet to help manage through the current uncertain environment while continuing to invest in growth opportunities.”

Looking ahead Metcash said that liquor sales for the first seven weeks of FY21 increased 5.5 per cent despite the continuing COVID-19 restrictions, adding that the increase in sales for the first seven weeks of FY21, excluding those customers impacted by the trading restrictions was around 15 per cent.