Metcash Limited (ASX: MTS) has just delivered a fresh trading update to investors this morning, are the shares too good to miss?
Metcash is a leading wholesale distributor of supermarket products and the owner of popular retail brands like IGA, Mitre 10 and Foodland. In liquor it owns The Bottle-O, Cellarbrations and Duncans.
Here’s what Metcash announced in its update
The main part of the market released related to a trading update for each of its important operating segments.
Metcash said that year to date food sales are marginally higher compared to the prior corresponding period a year ago. However, in the supermarket section, the rate of decline in wholesale sales excluding tobacco was broadly in line with what was reported in the first half of its 2019 financial year.
In regards to liquor sales, Metcash said that the second half has remained strong, with the division supported by increased wholesale customer volumes.
Metcash had previously warned at the announcement of the first half of FY19 result that hardware sales in the second half were softening due to a slow down in the amount of construction activity in the ‘Trade’ sector.
However, Metcash did report that it expects to experience the full synergy benefits from the acquisition of Home Timber and Hardware by the end of FY19.
Anything else from Metcash?
Metcash announced that it is trialling new small format convenience stores with funding of around $165 million, although more funding would be required if the trial is successful and the stores are to go nationwide with a target of 150.
The company is also going to trial a liquor company-owned store because management see good potential growth in this sector.
Metcash is also doing a daily fresh trial with 7-Elevan in Western Australia and with BP in Victoria.
Is Metcash a buy?
Metcash has recovered well since mid-2015 when it was hitting rock bottom, however sustainable long term growth with its current business could be difficult. That’s why I like the idea of the various trials the company is trying to see if it can open further growth avenues.
But, with strong competitors in the sections of the market that it operates, I personally wouldn’t want to be a shareholder. Instead, I’d prefer to own of the proven ASX shares in the free report below.
3 Proven ASX Shares Better Than Metcash?
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