Metcash (ASX:MTS) is expected to benefit from a sales tailwind driven by ongoing food inflation worsened by the US-Iran war, Jefferies said in a note on Monday.

The wholesale distributor's pre-declared results hint at a notable recovery in liquor margins, and the company is poised to report its fiscal year 2026 results on June 22 in line with expectations.

The investment firm said improvement in the hardware segment is likely delayed, as it continues to struggle under tough macroeconomic conditions. However, much of the weakness is already reflected in the base, limiting further downside.

Jefferies said sales decline in tobacco, which fell by 29% in fiscal year 2026, may have bottomed and sees trends to stabilize as the impact of stricter enforcement and packaging rule changes begins to pass.

The brokerage expects management to comment on potential one-off items in fiscal year 2027 and further detail on progress towards more than $25 million in annualized cost savings.

Jefferies maintained a buy rating on Metcash and kept its AU$3.50 price target.