Metcash shares hit by lost 7-Eleven deal

Metcash impaired $237M for dropping 7 Eleven deal

Metcash to cop fresh $237.4m writedown

Independent food wholesaler Metcash has announced an after-tax write-down of $ 237.4 million as a result of the end of its $ 800 million supply contract with the 7-Eleven chain of fix.

Metcash controls household names like IGA, Mitre 10, Cellarbrations and Thirsty Camel.

"Metcash was unable to reach agreement with 7-Eleven on its supply requirements for the east coast, including delivery routes and scheduling", the ASX-listed firm said.

Metcash has announced a $237.4 million writedown against its major food division just days after revealing 7-Eleven would not be renewing its $800 million supply contract.

Today, the Metcash braced shareholders for impact ahead if its first half-year report for the 2020 financial year.

With the contract ending in August 2020, Metcash also announced a loss of $ 15 million from the retailer's profit before interest and taxes (EBIT) in its food division.

However, Metcash stressed that the impairment is non-cash in nature.

The loss of the 7-Eleven contract is the latest in a string of blows to the business.

At 1306 AEDT, Metcash shares were down 10.5 per cent to $2.72. In early afternoon trade, shares are up for grabs at $2.88 apiece in a market cap valued at $2.61 billion.

Total impairments since June 2018 have now exceeded $500 million while Metcash has faced increasing competition in the grocery space as traditional giants Woolworths and Coles announce cost-cutting measures to compete with Aldi and newcomers including Kauffmann, Lidl and Amazon.

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