“We firmly believe healthy retailer and supplier relationships are key to the continued success of our sector, as well as serving the needs of millions of customers,” it stated. “We welcome the decision to retain fast and cost-effective avenues for dispute resolution for the benefit of suppliers, especially smaller ones.”
Metcash delivered its full-year results on Monday as it looks to expand its private-label offerings as Australians shop across different supermarkets for value for money.
Consumers are buying items on discounts and promotions more frequently, with chief executive Doug Jones adding that Metcash’s medium- and large-format stores were continuing to narrow the price gap with the major supermarkets.
“We don’t talk about the actual price gap, but it is very low now. I would argue that it would be almost unnoticeable,” said Jones.
Amid ongoing cost-of-living pressures, supermarket chiefs are closely watching the way Australians are taking more time and travelling further to spread their grocery shops across a range of retailers.
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While Jones said Metcash’s differentiated offerings from local suppliers were holding up well in this environment, private-label sales have risen 15.5 per cent over the past financial year as shoppers trade down to more affordable options.
“We’re really focused on delivering value for families at the moment, and so we’ll now start to focus on a wider range of private labels,” he said.
Metcash’s private-label brands, Black & Gold and Community Co, make up less than 10 per cent of its total supermarket sales, lower than Coles and Woolworths, where private labels make up about 30 per cent and 21.4 per cent of sales, respectively. Coles chief Leah Weckert has noticed customers flocking to Aldi, and the company is expanding its own exclusive brand range as a result.
Metcash said total group revenue rose 0.7 per cent to $15.9 billion, but underlying earnings slid 0.9 per cent to $496.3 million.
Underlying profit after tax fell by 8.2 per cent to $282.3 million and statutory profit after tax decreased by 0.7 per cent to $257.2 million, driven by weakness in the hardware sector as building and construction businesses struggle under the strain of high interest rates.
Metcash’s hardware division, which consists of the IHG and Total Tools chains, saw earnings fall by 3.8 per cent to $210.9 million. Jones said he was reluctant to call a bottom to the building market’s woes, but he said hundreds of thousands of homes needed to be built in Australia and pointed to state and federal governments’ support in creating more housing supply.
“Nobody would argue that we’re happy with the profit decline, but that’s a really good result in comparison. We know our house is in order, we feel good about our position, we feel good about our strategies,” Jones said.
Metcash’s results generally came in slightly above market expectations, but the share price was down 2.7 per cent in afternoon trading.
Analysts from UBS and E&P Capital noted a slower start to the new financial year, which Metcash said was flat for the first seven weeks of fiscal 2025 when excluding the recent Superior Foods acquisition.
“Management continues to do a good job managing the business in a tough environment. However, we expect investor concerns will remain given the weak sales result,” said E&P Capital retail analyst Phillip Kimber.
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