Metcash saw sales improve across its supermarkets and liquor categories during the first quarter of FY20, though hardware continued facing difficulties due to slowing construction.
The decrease in hardware sales also reflects the loss of a major client, Metcash said, with sales declining 4.4 per cent on the prior corresponding period.
Food sales improved during the first quarter 0.6 per cent, despite a highly competitive market. Supermarket wholesale sales, however, fell 0.5 per cent.
Metcash’s supermarket segment brings together IGA, Supa IGA, IGA Xpress, Foodland and Friendly Grocer/Eziway,
The group has previously stated it believes it has oversaturated the IGA name, and intends on putting more focus on its other brands moving forward.
Metcash’s liquor segment, which includes the Cellarbrations, Bottle-O, IGA Liquor, Thirsty Camel, Big Bargain Bottleshop and Porters Liquor brands, saw sales improve 0.7 per cent
This was due to a trend of “premiumisation” of liquor sales continuing into FY20.
According to Metcash, private label wine sales grew 20 per cent during FY19, and now make up 85 per cent of its private label sales.
“While our markets remain challenging, we are encouraged by the confidence of our independent retailers in the future and their willingness to continue investing in stores,” Metcash chairman Robert Murray told investors at the business’ AGM.
“Together, we are improving the quality and competitiveness of our retailer networks across supermarkets, liquor and hardware to underpin their ongoing success.”
In July, the business reported net profit fell 3 per cent to $210.3 million during FY19, while group sales improved 1.4 per cent $14.6 billion.
During this period, Metcash opened the first of ten proposed trial locations for the next generation of IGA Express stores at Bondi, NSW, with a focus on fresh and meal solutions.
According to Metcash, shopper behaviour to date has been in-line with their expectations, with customer numbers up approximately 25 per cent. Fresh currently represents approximately half of total sales at this new store format, while ready made meals make up an additional ten per cent.
Additionally, a further 79 stores were refurbished through the diamond store accelerator program, bringing the total number of stores refurbished to approximately 400.
A further 500 stores were identified for the program.
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