AUSTRALIAN RETAILER'S COMEBACK CONTINUES

ARTHUR HAGOPIAN

SYDNEY, Australia (FNS) -- The newly restructured Australian grocery wholesale distributor and marketer Metcash Trading (formerly the Davids supermarket chain) here said last week it has continued its strong recovery.

Earnings for the first half were up 32% percent to more than $13.5 million, and sales rose 15.7% to $1.25 billion. The company said these results reflect Metcash Trading's 1% rise in marketshare across Australia.

Each of the group's four divisions (IGA Distribution, Australian Liquor Marketers, Campbells Cash & Carry and John Lewis Food Service) recorded substantially improved profits.

The company has closed or sold all its retail stores, a move that has cost it close to $6 million.

Andrew Reitzer, Metcash Trading chief executive officer, said the company's 1,047 independent IGA stores "are now operating across the Eastern Seaboard and South Australia and the strength of the IGA brand is evidenced by sales growing by 4.6%."

Over the six-month period, 24 IGA stores opened and 43 stores were remodeled, adding some 200,000 square feet to IGA Retailers' floor space. Coupled with Metcash Trading's improved partnership arrangements with its customers and suppliers, stronger cash flows will continue to build in the future, he said.

The now wholly owned Australian Liquor Marketers achieved sales growth of 13% in the half year, with earnings up 31%.

Campbells Cash & Carry's earnings also reflected strong growth in the six months and sales rose 13%, with its 40 warehouses currently serving 45,000 customers.

"The division is capturing increasing sales from the convenience sector and also seeing strong growth from its e-commerce activities," Reitzer said.

However, sales by Metcash Trading's food service and catering distributor, John Lewis Food Service, recorded a 4% decline, as a result of unprofitable contracts relinquished. Nonetheless, earnings at the division improved.

John Lewis is now showing very strong sales growth as part of its strategy to focus on "street business" (cafes and restaurants) as its client base and expand its market on the back of changing lifestyle habits with time-poor, money-rich customers and surging tourism numbers, Reitzer said.

He said the continuing strength in sales and profitability indicated that grocery and liquor retailing conditions in Australia are still buoyant. and expected the company to post similar gains for the full year.