Mr Jones added the competitive advantage in the food and liquor businesses is “locals serving locals”, helping to boost group sales which rose 7.7 per cent for the 23 weeks to October 9. That was a slower pace of growth than the 8.9 per cent early in the fiscal year.
Strong sales momentum has continued in the first half in all segments, underpinned by the improved competitiveness of its retail partners, and by wholesale inflation which is sitting at 5.8 per cent. Wholesale inflation was up 4.9 per cent in the first quarter, excluding tobacco and fresh produce.
Sales in the food business gained 2.6 per cent in the 23 weeks, despite cycling impacts of extensive lockdowns a year ago with strong demand in both the supermarkets and convenience.
“We are the Number 4 (food retailer), as we’ve said today, we want to get to Number 3,” Mr Jones said.
“We need to get more square meters on the ground and that will turn our strong like for like (sales) into overall growth, and I think then you’ll really see us accelerate.”
Metcash plans to open another Supa Valu store taking it to four sites – which are up to 4000 square metres and have a narrower range.
Metcash – which has an April 30 year-end date – also operates the Independent Hardware Group (IHG) and has a majority stake in Total Tools. It is the second‑largest player supplying independent liquor stores including Cellarbrations, the Bottle‑O, IGA Liquor and Porters Liquor.
Sales jumped 17.1 per cent in hardware unit with IHG sales gaining 9.6 per cent, underpinned by like-for-like sales of 4.6 per cent. Total Tools sales surged 75.2 per cent so far in the half. Mr Jones said inflation remained high, particularly in trade, although there has been an improvement in the availability of supply.
Total Tools is targeting 8 to 10 new sites per year with a network size of about 130 stores by 2025, from its current 101 stores. Wesfarmers-backed Tool Kit Depot is making a move into professional tools, but Mr Jones was not concerned.
“We are not going to rest on our laurels. Sydney Tools equally is a formidable competitor, and they’ve got strong growth aspirations. But we have a strong pipeline of stores … in the future, we think there’s at least 170 stores that we can open across the country. What’s really pleasing is that we’re seeing strong performance from the new stores,” he said.
In liquor, sales increased 12 per cent reflecting on-premise sales and strong demand from retail stores.
Mr Jones said COVID-related costs have started to ease, as are supply chain challenges. However, he warned the availability of labour remains very tight.
Under Project Horizon, Metcash is replacing nine enterprise resource planning or ERP systems with one system to simplify the business. Metcash said a key focus into calendar 2023 is the food and liquor program update, adding there is no change to Horizon capex.
Mr Jones flagged there is a step-up in funds employed driven by multi-year investments in its hardware businesses; DC redevelopments in Victoria and WA; increased inventory due to inflation as well as digital and other bolt-on M&A opportunities.
Mr Jones joined the $3.7 billion company from Massmart in South Africa, a Walmart subsidiary. Metcash shares ended 1 per cent lower at $3.82 per share on Monday.
