Retailing: Metcash Joins The Downgraders
Metcash shares eased yesterday to an eight month low yesterday after the company cut its 2011 full year profit forecast in half.
Metcash said underlying earnings growth is now expected to be in the range of 3% to 5% - down from the previously forecast 6%-8%.
The group joined its bigger rival Woolworths in cutting its earnings guidance for the full year.
Woolies new guidance is for earnings growth of 5% to 8%, instead as much as 11% for the year.
Like Woolies, Metcash blamed a string of factors, including the bad weather, price deflation and consumer caution.
The company had warned of the possible downgrade when it reported its half-year results last November and food and liquor prices had continued to see deflation since that time, Metcash said yesterday.
Delivering the first-half results on November 30, 2010, Metcash chief executive Andrew Reitzer said deflation on dry packaged groceries at the time was 1.7%, and that deflation on its fresh product was about 11%.(That will change with the impact of the
The shares also reacted to some of the comments Metcash CEO, Andrew Reitzer said in a conference call later with analysts.
In that he blamed price deflation (no great surprise), and then claimed that Coles supermarkets boss, Ian McLeod was responsible for a lot of the problems with his intense price cutting.
He was reported by various media outlets as saying that