Wholesaling giant Metcash has had a strong start to the fiscal year in terms of sales, but it has warned investors that elevated inflationary pressures on its food products could dent profit margins.
The company has managed to remain resilient in a year mired by external challenges; fiscal 2026 saw a modest uplift in sales, countered by a dip in profits. Group chair Peter Birtles told investors that Metcash’s “diversified portfolio, disciplined execution” and “independent retail model” are the cause behind the resilience.
In the first 18 weeks of the new financial year, Metcash boosted sales growth to 2.8 per cent on the previous year, excluding tobacco sales. This stronger performance has been led by its tools and hardware division, up 6 per cent, and its wholesale liquor business, up 5.1 per cent.
But Metcash’s flagship food segment, up 2.6 per cent versus the prior comparable period, could cause challenges for the group’s bottom line.
“Persistent cost inflation” in this area – along with liquor – is outpacing its sales growth. The wholesaler has previously flagged an elevated cost of doing business (CODB), while also claiming to have recorded “no material impact” from the conflict in the Middle East and its impact on supply chains.
At the same time, Metcash is nearing completion on the winding down of its New Zealand liquor operations. These operations are expected to end completely before the second half of fiscal 2027, and Metcash expects to incur around a $2 million hit to its earnings as a result.
