Metcash shares hit by lost 7-Eleven deal
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Metcash shares have dropped more than 10 percent to a four-month low after 7-Eleven chose not to renew its contract with the wholesale food and beverage supplier when it expires in August.
Metcash on Friday said its annual sales to 7-Eleven total about $800 million a year, mostly in lower-margin tobacco products.
“Metcash was unable to reach an agreement with 7-Eleven on its supply requirements for the east coast, including delivery routes and scheduling,” the ASX-listed firm said.
However, Metcash said it was still in talks to continue to supply 7-Eleven stores in WA.
The blow is just the latest for Metcash, which in 2018 posted an impairment-driven loss of $149.5 million when Drakes Supermarkets declined to extend its SA contract after Metcash had announced plans to open a new purpose-built distribution center.
At 1306 AEDT, Metcash shares were down 10.5 percent to $2.72.
Questions & Answers
Q.When does Metcash's current supply contract with 7-Eleven expire?
When does Metcash's current supply contract with 7-Eleven expire?
The existing contract between Metcash and 7-Eleven is set to expire in August. Metcash announced that 7-Eleven chose not to renew this agreement for its east coast operations.
Q.What is the estimated value of Metcash's annual sales to 7-Eleven?
What is the estimated value of Metcash's annual sales to 7-Eleven?
Metcash stated that its annual sales to 7-Eleven amount to approximately $800 million. A significant portion of these sales is derived from lower-margin tobacco products.
Q.What reason did Metcash provide for the loss of the 7-Eleven contract?
What reason did Metcash provide for the loss of the 7-Eleven contract?
Metcash indicated it could not reach an agreement with 7-Eleven regarding its supply requirements for the east coast. This included issues related to delivery routes and scheduling.
Q.Has Metcash experienced a similar contract loss with another major retailer recently?
Has Metcash experienced a similar contract loss with another major retailer recently?
Yes, Metcash previously faced a similar situation in 2018 when Drakes Supermarkets chose not to extend its South Australian contract. This led to an impairment-driven loss for Metcash.
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