Metcash looks to private label, acquisitions to spur growth

Posted by Daniel Palmer on 20th October 2009

Grocery wholesaler Metcash is “actively seeking” attractive bolt-on acquisitions and new business opportunities to drive the company forward in the long-term, while increased focus on private label and the fresh offering is expected to boost profit within the IGA supermarket network.Chief Executive, Andrew Reitzer, has also maintained guidance for the full year, with earnings per share growth in the order of 7-10% forecast. Like Woolworths, who reported first quarter sales today, Metcash has seen inflation levels fall which will have an impact on sales growth.

Mr Reitzer said the company was uncertain about the future economic conditions, but has confidence that the discretionary nature of their business will ensure they can thrive not matter what the economic circumstances.

“The trading environment remains strong but uncertainties continue to impact wealth and discretionary consumer spending,” he told delegates at the Citi Inaugural Australian Investment Conference. “However given MTS’s focus on selling consumer essentials, no likely weakening is foreseen in the markets served by the Group.”

In an outline of the group’s strategy, the company suggested a key driver of medium and long-term growth would be acquisitions, while store reinvestment and an enhanced private label offering would boost performance in the near term.