Coles falls short of Woolies

Company News

by Glenn Dyer

Coles (ASX:COL) fell short of matching the September quarter sales performance of its bigger supermarket rival, Woolworths (ASX:WOW).

While Woolies lifted group sales by 5.3% and Australian food (supermarkets) by 6.4%, Coles reported a 3.6% rise in first-quarter sales and 4.7% for its supermarkets.

Excluding tobacco sales (which continue to fall), Coles supermarket sales were up a more solid 5.9%, inching closer to Woolies' performance and growing slightly faster than inflation in the quarter.

Coles said its comparable store sales were up a solid 4.6% in the quarter, but that was slower than Woolies' 5.5% growth in its Australian food retail business.

Coles reported total sales of $10.25 billion for the quarter, with supermarkets accounting for the vast majority of that at $9.2 billion.

Coles attributed its sales growth to increased sales to customers eating at home and special offers (price discounts).

Group liquor sales were up 1.8% to $851 million, indicating a decrease in real terms.

CEO Leah Weckert stated in Thursday's release, "During the quarter, we continued to focus on providing our customers with more value at the checkout through our 'Great value. Hands down.' campaign, as well as everyday prices, weekly specials, and personalized Flybuys offers."

"We added several features to make it easier and faster for customers to find value through our digital platforms. Our expanded Exclusive to Coles brand portfolio across food and liquor has never been more important, while collectible campaigns have also provided value to customers.

"Pleasingly for customers, availability continues to improve, and inflation in key categories is moderating," she said.

Looking to the rest of the financial year, Coles said, "In the early part of the second quarter, Supermarkets and Liquor sales revenue growth are broadly in line with the first quarter."

"We continue to focus on delivering value across our everyday prices, Down Down offers, weekly specials, and promotions, personalized Flybuys offers, and our exclusive brand range.

"We have new products for Christmas and summer entertaining across Supermarkets and Liquor, for which sales results are encouraging, and we expect more customers to be cooking and entertaining at home this season.

"Enhanced process, security, and service measures to reduce total loss have been rolled out across Supermarkets in the first quarter and will continue into the second quarter.

"Pleasingly, improvements in waste and markdown have been achieved across the quarter. In stock loss, the loss technology solutions, Skip Scan and Smart Gates, are expected to be operational in over 250 of the most impacted stores by the end of CY2023.

"The early results of stores where the technology has been rolled out are in line with our expectations. A number of broader cost and margin optimization measures have been initiated across the Group, with some benefits expected in the first half," Coles said.

Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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