Food and liquor sales have picked up and there are signs a national crackdown on illegal smoking products is working, a leading retail supplier says.
Metcash, which supplies goods to 6,500 independent stores including IGA, Mitre 10, Bottle-O and Cellarbrations, says trading was down in May as consumer sentiment softened in response to geopolitical uncertainty and cost-of-living pressures.
But food and liquor sales bounced back well in June, recovering to the same growth levels of 2025/26, chief executive Doug Jones told a results briefing on Monday.
Trading overall for the first seven weeks of Metcash's new financial year, which began May 1, had been steady, he said.
Total sales were up 1.9 per cent, with food sales climbing 1.6 per cent, liquor sales rising 1.3 per cent and hardware sales increasing 5.8 per cent.
For its fiscal year ended April 30, Metcash posted a bottom-line net profit of $279.1 million, down 1.5 per cent.
Sales revenue was basically flat at $17.4 billion while the underlying net profit dipped 2.4 per cent to $268.8 million, which was in line with guidance.
Metcash delivered solid earnings and strong cash generation in the year, despite mixed trading conditions across its markets, Mr Jones said.
Like many retailers, Metcash blamed a booming black market in illegal cigarettes for cutting into tobacco sales.
But that sales decline slowed in the second half as the government authorities stepped up a nationwide crackdown, particularly in Queensland.
During the year, revenue from tobacco sales dropped 29 per cent to $1.3 billion. Since 2020/2021, Metcash has lost $1.8 billion in sales.
Meanwhile, the price gap between Metcash's 156 large IGA stores and the big-chain supermarkets narrowed to 2.1 per cent, from 3.4 per cent a year ago.
This meant its prices were more competitive than ever, Metcash said.
After small-format, regional and remote IGA location stores were included, the gap between prices at 1,238 IGA stores and the chains was 6.4 per cent.
That was down from 7.4 per cent a year ago.
Historically a wholesale supplier to independent retailers, Metcash acquired its first supermarkets during the fourth quarter, buying stores in the regional SA towns of Goolwa and Naracoorte.
It's planning for more acquisitions, with the purchase of three Daly's supermarkets in Victoria expected to be completed in July.
Metcash estimated it could spend $40 million to $60 million a year buying stores over the next four years, with an eye to acquiring 60 to 100 by 2029/30 and a long-term goal of owning 25 to 30 per cent of IGA network revenue.
"Store ownership enables faster rollout of initiatives, such as loyalty, retail media, and commerce, and provides exposure to retail margins, strengthens alignments across the network, and improves execution through hands-on operational insight," Mr Jones said.
The stores will continue to trade under their existing branding.
In early afternoon trading, Metcash shares were down 2.5 per cent to $3.10.
