Metcash Limited (ASX:MTS) shares fell 2.82% to close 8 cents lower at $2.76 on Tuesday, having plunged more than 25% in the last week alone.
The IGA and Foodland supermarkets supplier announced this morning that it will be hit with a $352 million impairment charge after one of its customers shunned its new South Australian distribution centre.
Metcash will record a $318 million non-cash impairment against goodwill and other intangibles, plus a $34 million asset writedown.
“These impairments are non-cash in nature, have no impact on the company’s debt facilities, compliance with banking covenants, or its ability to undertake capital management initiatives,” Metcash said in a statement.
Metcash last week flagged a potential $270 million sales hit after Drakes Supermarkets said it would not commit to Metcash beyond the June 2019 end of the parties’ current South Australia agreement.
Total sales, including tobacco, to Drakes Supermarkets in SA were about $270 million in the 12 months to April 30.
Brokers are predicting it could continue to see losses, and potentially fall to as low as $2.18.