Shop Local Message Sends Metcash Sales Surging




The COVID-19 sales boom goes on for Metcash, the country’s third-largest supermarkets and liquor business and second-ranking hardware retailer.

The company’s AGM was told yesterday that sales of groceries and food, liquor and hardware rose more than 10% in the first quarter as customers shopped locally (That's for the month's May, June, and July, as the company has an end of April balance date).

Metcash said total Food sales in the first quarter were up 11.4% on the prior comparative period, and Supermarkets wholesale sales (ex-tobacco) jumped 13.8%

Shareholders were told that excluding the impact of the loss of Drakes supply business in South Australia, total Food sales in the first quarter of FY21 increased 14.9% and Supermarkets wholesale sales (ex-tobacco) surged 18.4%.

Investors liked the news and pushed the shares up to $2.98, a gain of 2.4% on a day when the wider market was in the red all day.

The performance is very strong given the loss of the Drakes business and ahead of the slow winding back of sales to the 7-Eleven liquor chain.

“Liquor continued to perform well following the relaxation of restrictions in both New Zealand and for ‘on-premise’ businesses across Australia, the meeting was told and first-quarter sales were up 11.4%,” the company said.

Metcash said that excluding those customers impacted by the trading restrictions in New Zealand and Victoria, liquor sales in the first quarter of FY21 increased 23.2%

And the Mitre 10 hardware chain did well (as did rival Bunnings) with first-quarter sales surging 19.2%. “Hardware had a strong first quarter underpinned by very strong demand in DIY categories,” Metcash said.

Chairman Robert Murray told shareholders: “The FY20 financial year will stand as one of the most challenging years we have experienced, with devastating bushfires severely affecting many of our retailers and local communities. particularly in rural and regional areas where our retailers are strongly represented.

“This was then followed by the COVID-19 pandemic, which drove unprecedented spikes in demand, particularly in the Food pillar, resulting in extreme pressure on our supply chain,” he said.

He said, “Financial year 2021 has started strongly.”

“We continue to see the shift to more local neighbourhood shopping across all pillars and we are now focused on ensuring the new and returning customers gained through the COVID-19 period are retained in our independent network," Mr. Murray said.