Metcash Earnings: Consumers Struggling, but Fiscal Stimulus to Alleviate Pain

Wages lagging high inflation and huge increases in mortgage payments are taking their toll on Australian shoppers. We estimate real household incomes per capita, after interest payments on mortgages, have declined by 9% over the past two-and-a-half years. Against this backdrop, no-moat Metcash delivered group sales growth of just 1% to AUD 16 billion for the year to April 2024. Group underlying operating profits dropped by 1%. Intense competition lowering gross margins in hardware and higher corporate costs more than offset earnings growth in the food and liquor segments.