The share price of Metcash Limited (ASX:MTS) has plummeted 13.7 per cent to $3.18 after the wholesale distribution and marketing company flagged a potential $270 million sales hit on Monday morning.
This comes as Drakes Supermarkets said it would not commit to having its supermarkets supplied from Metcash’s proposed new South Australian distribution centre.
Metcash says Drakes has not advised it has any intention to change its supply arrangement in Queensland, and that its current agreement with Drakes in South Australia runs until June 2019.
Total sales, including tobacco, to Drakes Supermarkets in South Australia were about $270 million in the 12 months to April 30, and Metcash says it is weighing the implications of the news with a view to updating investors by the time it releases its full-year results on June 25.
Today’s movement is a sharp turn-around from last week, when Metcash Limited hit a 52-week high on the news that Wattle Health Australia Ltd (ASX:WHA) had secured an agreement to supply its baby food range to Metcash Trading Limited, the wholly owned subsidiary of Metcash Limited.