Independent food wholesaler Metcash has announced a $237.4 million post-tax impairment following the end of its $800 million supply deal with convenience chain 7-Eleven.
In a statement to the market on Tuesday morning, the retailer said it would recognise the impairment in its half-year results, which covers the six months ending October 31.
The non-cash impairment will primarily be to Metcash’s goodwill, which assesses things like the value of its brand name and customer relations. Part will also cover other assets in the company’s food division.
Metcash is the primary supplier to IGA independent supermarkets across Australia, and also supplies Mitre 10 and Home Timber & Hardware home improvement stores. Last month, the company confirmed convenience store 7-Eleven would cease its lucrative supply contract with the distributor, worth some $800 million.
With the contract set to end by August 2020, Metcash also flagged a $15 million hit to the retailer’s earnings before interest and tax (EBIT) in its food division. It’s the second goodwill impairment the $2.6 billion retailer has taken in two years, with the company surprising investors in June last year with a $352 million write-down, the majority of which was to the business’ goodwill.