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Poor grocery sales cause Metcash’s earnings to drop

Metcash is expecting its earnings outlook to decline by 13 to 15 percent due to lacklustre grocery sales.

The wholesaler, which is set to release its annual results today, said in a statement to the ASX yesterday that it expected the reduction in assets to represent anywhere between $30m and $35m, The Australian reports.

“(The loss) was entirely due to our food and grocery pillar,” said chief executive Ian Morrice.

"Over this period Metcash food and grocery's operating de-leverage has continued due to lower warehouse sales volumes than last year and ongoing deflation. The company's income has also been further impacted over recent months as the necessary changes to our food and grocery operating model have commenced."

Morrice says that the company’s new operating model inclusive of a reduction in inventory, the restructuring of its private label products, and a ‘price match’ initiative that saw the prices of many products lowered all impacted on the company’s income.

Further details are expected to be released shortly.

 

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