Franklins Feels the pinch

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Franklins owner and grocery wholesaler Metcash will shed 478 jobs as it restructure its business

Metcash
company details

The company on Tuesday said it would merge several of its operations into one business to end duplication and improve efficiency.

That would lead to 478 redundancies from its Campbells, merchandising and fresh food businesses.

Chief executive Andrew Reitzer said the job losses were regrettable, but the reality of the trading environment meant Metcash had to focus on ensuring the business was structured for the future.

“These difficult conditions result from continued deflation which is pushing prices and margins down, and a value-conscious consumer who increasingly purchases on discount,” Mr Reitzer said in a statement.

The business restructure would result in a one-off charge of $34 million to $43 million, to be included in Metcash’s results for fiscal 2012, which ends on April 30.

Metcash has maintained its guidance for low to mid single digit underlying earnings per share growth in the year to April.

The restructure will result in the establishment of Metcash Food and Grocery, which will combine the company’s IGA Distribution, Merchandising, Fresh and Campbells businesses.

Fifteen regional Campbells Cash & Carry stores will be closed, resulting in 315 job losses.

They’re to be closed because more customers use petrol and service stations rather than traditional convenience stores, Metcash said.

The remaining job losses would come from the company’s corporate offices, it said.

The company had also sold its specialist food business Foodlink to Bidvest Australia for a confidential sum. The 90 Foodlink employees would be offered jobs by Bidvest, Metcash said.

It also said it would take a $75 million to $90 million impairment charge on two joint venture businesses it has in Queensland.

The Cornetts and Walters IGA businesses had been hit by deflation and the economic difficulties caused by natural disasters in Queensland, Metcash said.

“Both companies have taken on many new stores in recent years and the current trading environment has stifled their ability to develop these stores to acceptable levels of profitability,” Mr Reitzer said.

Some unprofitable stores will be closed and others restructured.

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