Insights

Metcash (ASX:MTS) share price drops following trading update

Here’s how Metcash is performing in FY 2022..
The post Metcash (ASX:MTS) share price drops following trading update appeared first on The Motley Fool Australia. –

The Metcash Limited (ASX: MTS) share price is trading lower on Wednesday morning.

At the time of writing, the wholesale distributor’s shares are down 1% to $4.03.

Why is the Metcash share price trading lower?

The Metcash share price has come under pressure today after broad market weakness offset the release of a positive trading update ahead of its annual general meeting.

According to the update, Metcash has started FY 2022 in a positive fashion, with trading continuing to be strong in all pillars and well above pre-COVID levels in FY 2020.

Management notes that a key driver of this is a shift in consumer behaviour. This includes more local neighbourhood shopping, the move from city to regional areas, more eating at home, home consumption of liquor substituting on-premise consumption, less overseas travel and duty free shopping, and a high level of home renovation and DIY activity.

Also underpinning its strong form has been the improved competitiveness of its store network supported by its MFuture program, COVID-related trading restrictions in Australia and New Zealand, and manageable increases in COVID-related costs.

How are its businesses performing?

For the first 16 weeks of FY 2022, Supermarket sales were down 1.8% over the same period last year. However, they are up a solid 12.9% over the prior corresponding period in FY 2020. This led to total Food sales falling 7.4% over the prior corresponding period or 1.4% excluding the impact of the 7-Eleven contract loss.

Things have been a lot more positive for its Liquor and Hardware businesses. Total liquor sales are up 9.5% over the same period last year, whereas Hardware sales are up 16.3% year on year.

In respect to the latter, management notes that Trade sales have continued to be strong, buoyed by a high level of residential construction and renovations activity. This has more than offset a decline in DIY compared with the same period in FY 2021.

One slight concern, though, is that strong demand is continuing to put pressure on stock availability, particularly for timber.

What else was announced?

Metcash’s Chairman, Rob Murray, also revealed the company is looking to make its operations even more efficient.

He explained: “We are also investing in a new project named ‘Horizon’ which aims to drive efficiencies through simplification, as well as growth through making it easier to do business with Metcash. This will be a staged program with the first phase focused on simplification and building a better future operating platform.”

However, despite this and its strong start to FY 2022, it hasn’t been enough to stop the Metcash share price from dropping into the red today.

Nevertheless, the Metcash share price is still beating the market this year with a gain of 18% in 2021.

The post Metcash (ASX:MTS) share price drops following trading update appeared first on The Motley Fool Australia.

Should you invest $1,000 in Metcash right now?

Before you consider Metcash, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Metcash wasn’t one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of August 16th 2021

More reading

How does the Woolworths (ASX:WOW) dividend compare to its sector?
These 10 ASX 200 shares hit new 52-week highs this Monday

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;


To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.


An active and funded account with a positive trading balance is required to continue to have access to the tools;


Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;


Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!