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Coles reports half-year $594m net profit

Beef Central, 27/02/2024

The nation’s second largest supermarket group, Coles, this morning released its first-half  financial results for the six months to December 30, showing a net profit after tax of $594 million, on pre-tax earnings of $1.9 billion.

The supermarket division accounted for the lion’s share of Coles result, including sales of $19.78 billion, up 4.9pc on the same period a year earlier, and earnings of $1.73b.

The strong supermarket division results for both Coles and major rival Woolworths (see last week’s H1 financial summary) comes as both retailers face mounting scrutiny over retail food pricing and margins, especially in the face of dramatically lower livestock prices during the back half of 2023.

There are currently six inquiries either active or recently completed looking into supermarket pricing. They include:

  • Supermarket Inquiry (ACCC)
  • Select Committee on Supermarket Prices (Senate)
  • Competition Review (Treasury)
  • Australian Government Food and Grocery Code of Conduct Review 2023-24 (Treasury)
  • Select Committee on Cost of Living (Senate)
  • Inquiry into price gouging and unfair pricing practices (ACTU)
  • House of Reps Standing Committee on Economics — inquiry into promoting economic dynamism, competition and business formation.

Leah Weckert

Coles Group chief executive Leah Weckert said the company understood the cost of living pressures that many of its customers face, such as higher rent, mortgage, energy, and other household bills.

“That’s why we are working hard to deliver value to our customers every day. Over the last six months, we lowered the prices of hundreds of products through our “Great Value, Hands Down” campaign and delivered additional value through a wide range of Exclusive to Coles products and weekly specials,” she said.

With increases in the cost of living continuing to put pressure on many Australian households, investing in value for customers had been a major focus, Ms Weckert said.

During the period, Coles launched the “Great Value, Hands Down” campaign with the prices on more than 500 products dropped, including many essential staples. More than 1300 products were placed on everyday low prices as the company continued to invest in thousands of weekly specials and promotions, she said.

In the second quarter to the end of December, total supermarket price inflation was 3pc, compared to 3.1pc in the previous quarter. Fresh food category inflation (including fresh produce, meat, deli & seafood, and bakery), was 0.4pc in the second quarter compared to deflation of 2.3pc in the first quarter. Fresh produce and meat were in deflation across the half, reflecting cycling of seasonal events in the prior corresponding period, and falling livestock prices, Coles said.

This was offset by continued inflation in bakery where wheat commodity prices and labour input costs continue to generate cost price increase requests from suppliers.

Mirroring Woolworths progress reported a week earlier, Coles reported eCommerce sales (online purchasing of supermarket items) increased by 29pc to $1.8 billion with 9.1pc of customers using the service due to enhancements to the customer experience and continued network expansion.

The Coles Board declared a fully franked interim dividend of 36c per share.

 

 

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