Coles trumps Woolies again in first quarter sales growth

Jon Condon, 19/04/2013


Coles has again trumped major supermarket rival Woolworths, delivering a third quarter sales result up 5.3 percent on the same January-March period last year.

The result continues a sequence of 15 quarters where Coles’ (same-store*) sales growth performance has exceeded that of Woolworths, suggesting the gap between the two majors is narrowing.

On Friday, Woolworths delivered a third-quarter result showing a 3.8pc sales gain on a same-store basis (see Beef Central’s earlier report here).

Coles parent company, Wesfarmers Ltd yesterday released its third quarter retail sales results for the period ending 31 March, delivering total Coles sales, including new stores and petrol, up 6.4pc on a year ago to $8.35 billion.

Managing director Richard Goyder said the retail sales performance was pleasing, with the Coles (supermarket retail) and Bunnings (hardware) divisions results seen as highlights.

“Coles’ comparable food and liquor sales growth was strong, driven by good volume growth following further investments in price, particularly in grocery, and continued growth in fresh produce sales,” he said.

Further work to cut costs

Mr Goyder suggested there was still work needed on the supply chain, including moving towards direct deals with fresh food suppliers, to cut costs and give farmers certainty over long-term earnings, so they could invest in production efficiency.

He pointed to the direct milk supply deals struck recently with dairy co-ops Norco and Murray Goulburn announced last week as examples of the relationships the group wanted to build.

Mr Goyder said Coles would continue to push shelf prices down, despite complaints from suppliers that Coles was using its market power to demand unsustainably low prices.

“You could always go back to what the old Coles did, which was to pull the margin lever to get shorter-term profit results. But we won’t do that: we’ll keep working hard on the offer for customers, and we’ll stay the journey on value,” he said.

Coles achieved its sixteenth consecutive quarter of growth in comparable sales and sales density.

Coles managing director Ian McLeod said good comparative sales growth was driven by strong volume growth. Coles recorded overall food price deflation of 1.3pc in the third quarter.

“Our customers have benefited from our focus on quality fresh food and a better shopping experience, as well as our unwavering commitment to lowering prices despite external cost pressures,” he said.

“The reinvigoration and extension of our ‘Down Down’ campaign during the quarter began in January with the lowering of prices on hundreds of grocery lines that our customers buy most. The vast majority of these lower prices have been funded by Coles, and this investment has been welcomed by our customers and has resulted in good grocery volume growth.”

Coles opened four new supermarkets and closed three during the quarter, taking the total number of stores to 754 (Woolworths currently operates 888 stores nationwide).


* Same store sales measure only those stores open this year and last, avoiding incremental growth through new stores. 




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