Metcash slashes more jobs, shares slump to 14-year low
Struggling third-ranked supermarket company Metcash is proceeding with its second job-cutting program in two months as its shares hit a 14-year-low.
The job losses come after the country’s largest supermarket chain Woolworths on Wednesday confirmed it would slash an additional 400 jobs on top of 400 recently shed.
Metcash shares slumped to $1.26 at midday on Thursday, their lowest level since 2001 amid concern about retail spending. Woolies on Wednesday reported trade was “subdued” in April and official retail sales showed smaller retailers recorded a 2 per cent year-on-year sales decline in March.
A Metcash spokesman said there would be 60 redundancies in the coming weeks “as part of the company’s ongoing efficiency review” and people would be offered “redeployment where possible.”
Metcash made about 76 people redundant in March, across its food and grocery, IT, finance, legal and HR departments, as part of its push to turn from a “supplier-led [into a] demand-led company.” Metcash supplies groceries to independent grocers.
The spokesman declined to say which departments were affected by the latest round.
But the cuts are believed to be part of “Project Diamond”, Metcash’s program to reinvigorate its flagship food and grocery division that has struggled in recent years due to increased competition between supermarket giants Coles and Woolworths, and the growth of German discounter Aldi.
Sources say the cost-cutting will lead to promotion managers, buyers and merchandise managers being removed from every state, with their work to be picked up by Metcash’s Sydney headquarters.
“After more than two years of discussion, there will now be a skeleton merchandise department in each state and the rest will be offered packages or managed out of the business by the end of the year,” one said.
Metcash’s share price is down 32 per cent in 2015 so far, and its shares are under attack from short sellers, with 17.7 per cent of its free float shorted at the start of April. Short sellers bet on falling share prices, borrowing stocks to sell with the intention of buying them back when they are cheaper to make a profit.
Investors have complained that Metcash has failed to update them on the company’s progress over recent months.
Metcash recently announced that former Lion CEO and current Dick Smith chairman Rob Murray would become its chairman in August. It also announced its Sydney distribution centre had suffered hail damage.
Commenting on the March retail sales, investment bank UBS said it remained concerned about supermarkets’ near-term outlook, although Woolworths and Coles were “best placed to win share from smaller retailers.”
Extracted in full from the Sydney Morning Herald.