Metcash boss Ian Morrice says the grocery wholesaler can still reach the $15 billion sales target set by his predecessor, after unveiling a major spending program to address declining revenues.

The company, which distributes groceries through the IGA network of stores, on Friday unveiled a $480 million plan to upgrade its store network and improve its supply chain to reverse sliding revenues.

Metcash shares fell sharply in the wake of the announcement and were down 40 cents, or 9.5 per cent, to $2.85 at the close of trade on Friday.

The announcement follows a downgrade of the company’s 2014 earnings forecast due, in part, to disappointing sales in January and February.

But chief executive Ian Morrice said the capital expenditure plans would help grow sales and turn around the company’s performance.

And he said he shared predecessor Andrew Reitzer goal of growing Metcash’s revenue to around $15 billion a year.

“We remain as ambitious as Andrew was for the business,” he said.

Mr Morrice said the company would upgrade IGA stores to cover additional retail categories, including liquor, automotive and hardware.

“The consolidation and sustainable network growth initiative will see Metcash focus on converting more independent retailers to our liquor, hardware and automotive banners,” he said.

The company also plans to open new stores and improve its supply chain to reduce costs.

The company will fund the capital expenditure by reducing dividend payouts to shareholders and through its dividend reinvestment plan.