Coles sales lift 2.1pc despite drop in convenience business

MITCHELL NEEMS
OCTOBER 22, 2015
BUSINESS SPECTATOR
SUPERMARKET giant Coles has delivered a modest lift in first-quarter sales, despite a decline in its fuel and convenience business.
Parent group Wesfarmers said Coles’ total first quarter sales rose 2.1 per cent to $9.43 billion, up from $9.23 billion a year earlier.
A 4.7 per cent jump in food and liquor sales to $7.63 billion, was offset by a 7.8 per cent decline in convenience sales, which slipped to $1.80 billion.
Comparable food and liquor store sales increased 3.6 per cent in the quarter, which was in line with analyst expectations, while comparable food store sales increased 4 per cent.
Managing director Richard Goyder said the first-quarter results were pleasing, with good momentum in the retail portfolio continuing into 2016.
“This was supported by the continued reinvestment of productivity improvements into lower prices, improved customer service, better ranges and further store network optimisation,” he said.
Coles managing director John Durkan said the momentum in the first-quarter was underpinned by a focus on productivity and simplicity across the business to enable further investment in lowering prices and an improvement in customer service levels.
“Customers responded positively to continued strong price investment, and this was evident in the growth in volumes, transactions and basket size recorded during the quarter,” Mr Durkan said.
“Our absolute focus remains on delivering trusted value to Australian households through Every Day low prices, compelling promotions and innovation in Coles brand.”
Mr Durkan also said Coles’ transformation of its liquor business was progressing well, with early results including increased transaction growth during the quarter.
“The customer experience within Coles Liquor continued to improve during the quarter, and reflected the work completed over the past 12 months,” Mr Durkan said.
“While the early improvements are encouraging, more work needs to be done to improve the range, value proposition and store network.”
Wesfarmer’s home improvement section, largely Bunnings, saw sales increased 11.6 per cent during the quarter to $2.48bn.
The office supplies business, largely Officeworks, delivered a 6.5 per cent increase in sales to $403 million.
Home improvement and office supplies managing director John Gillam said the good sales momentum was the result of pleasing contributions from each growth driver in Bunnings’ strategic agenda.
“Our work creating more value, improving experiences and extending our brand reach is resonating well with consumer and commercial customers,” Mr Gillam said.
In a pleasing sign for Wesfarmers, both its department store chains posted solid sales growth in the first quarter.
Kmart delivered sales of $1.123 billion, a 12.5 per cent increase on the previous year.
Meanwhile, Target saw sales increase by 3.1 per cent to $776 million.
“We are on track with our transformation plan and are making satisfactory progress, but with more still to do,” Target managing director Stuart Machin said.
“We will continue to listen to our customers and invest in lower prices.”