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Metcash: Strong Half-Year Home Improvement Sales Growth

SC Mitre 10 Australia.jpg

Metcash Limited, the Australian owner of the Mitre 10 and Home Timber & Hardware brands, has reported on half-year trading, covering the six months ended 31st October 2020.

Hardware Summary:

Hardware sales (including charge-through) increased 20.6% to $1.3bn (1H20: $1.0bn) with significant growth in higher margin DIY sales. Excluding acquisitions, Hardware sales  (including charge-through) increased 16.2%.

Strong DIY demand was underpinned by a change in consumer behaviour to more home improvement projects, gardening and maintenance activity, and the success of MFuture initiatives to further improve the competitiveness of the IHG retail network. There was also a significant uplift in teamwork score which included Home Timber & Hardware increasing to over 70%.

Online sales continued to grow strongly, increasing 104% in the first half. 

The IHG banner group continued to perform well with LfL retail sales11 increasing 13.2% (DIY +35%, Trade +4%). The return to sales growth in Trade reflects increased renovation activity supported by COVID-19 restrictions and Government stimulus.

The growth in higher margin DIY sales has resulted in a change in the sales mix to ~40% DIY and ~60% Trade (1H20: ~36% DIY, ~64% Trade).

Hardware EBIT increased $25.6m (+ 65.8%) to $64.5m, reflecting a significant increase in sales volumes, the increased weighting of higher margin DIY in the sales mix, an increase in the contribution from joint ventures/ company-owned stores, and the earnings from acquisitions which included $4.8m from two months of trading in Total Tools Holdings.

The EBIT margin for Hardware increased 140bps to 5.1%.

Current Trading

In Hardware, sales in the first five weeks of 2H21 are up 25.3% (+19.3% ex-Total Tools) with sustained strong demand in DIY and Trade sales continuing to track positively. The business will continue to focus on its MFuture growth initiatives across Trade, DIY and digital, and retaining customers gained through the COVID-19 period. The second half will include a full six months of trading by Total Tools, including the four stores acquired and anticipated acquisition of a majority interest in a further eight independent stores. There continues to be a high level of uncertainty as to the potential impact on all our Pillars of any changes to COVID19 related restrictions and resulting changes in consumer behaviour.

Review the full results presentation here. 

Source : Metcash

Image : Emagnetic / 1471269623 

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14 December 2020

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