Agribusiness

Strong Q1 result for Coles, despite subdued consumer sentiment

Jon Condon, 16/11/2011

Almost 200 Coles outlets have now had extensive upgrades, including the meat departmentWesfarmers has announced a strong first quarter 2012 financial result for its Coles Food and liquor retail division, recording 5.5 percent growth over the same quarter last year to $6.281 billion.

Managing director Richard Goyder said that he was generally pleased with the result, particularly given that consumer sentiment had remained subdued throughout the quarter.

A highlight was the strong sales momentum in Coles supermarkets and Bunnings hardware, with both businesses continuing to build on solid results achieved in 2011, he said.

Coles’ food and liquor sales growth reflected the continued positive customer response to ongoing improvements across the business, underpinned by its commitment to providing better value, quality and service. Comparable same-store food and liquor sales grew by 5.2pc in the first quarter, over Q1 last year.

The company experienced food and liquor price deflation of 1.8pc during the quarter due to Coles’ continued price reduction on groceries and lower fresh produce inflation as crops began to recover from flood and cyclone damage earlier in the year.

Coles managing director Ian McLeod said the first quarter results represented strong progress in a tough retail environment.

“This reflects the ongoing transformation program we are rolling out across the business, as well as the customer response to our continued investment in lower prices through our ‘Down, Down’ campaign, creating a new platform of trustworthy prices which has been supported by further investment in quality and innovation in partnership with growers and manufacturers,” he said.

“However, weak consumer confidence in the face of rising living costs will continue to make trading conditions challenging in the lead-up to Christmas.”

Mr McLeod said the rollout of transformation programs continued at pace during the quarter, with the implementation of Easy Warehousing nearing completion in the second quarter of the financial year.

Coles continued to roll out its store upgrade program, with 157 sites now extensively renovated out of a national fleet of 742 supermarkets.

Coles Express, the scaled-down convenience-oriented store model, performed well in Q1, with sales growing by 1.8pc for Q1.

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