Wesfarmers says Coles' same-store food and liquor sales growth slows

Sue Mitchell
25 October 2017
AFR

Coles’ same-store food and liquor sales growth slowed in the first quarter of 2018 as Australia’s second-largest retailer cut prices to catch up with Woolworths and Aldi.

According to retail sales released on Wednesday by parent Wesfarmers, Coles’ same-store sales rose 0.4 per cent in the three months ended September 30, compared with growth of 0.7 per cent (Easter adjusted) in the June quarter and 1.8 per cent in the year-ago period. 

Coles invested about $200 million net of cost savings into price reductions and service in the June-half 2017, in an attempt to reinvigorate sales growth, and cut prices further in the September quarter.

Food and liquor prices fell 2.3 per cent during the quarter, mainly because of higher supplies of fresh produce. Excluding fresh produce, price deflation was 1.3 per cent, broadly in line with fourth-quarter price deflation of 1.2 per cent.

Coles managing director John Durkan expects same-store sales to start to recover in the June-half, depending on market conditions.

Coles’ total food and liquor sales in the September quarter rose 1.5 per cent to $7.9 billion after the retailer opened a net five new liquor stores and closed a net three supermarkets.

However, the modest gains in liquor and grocery stores were offset by a sharp slump in sales in convenience stores, which fell 9.5 per cent to $1.4 billion, dragging Coles’ total sales down 0.3 per cent to $9.4 billion.

In releasing his last financial results before handing the reigns to Rob Scott in November, Wesfarmers’ outgoing managing director, Richard Goyder, said sales performance across the group was “generally pleasing.”

Bunnings Australia and New Zealand posted another strong quarter, with same-store sales rising 10.8 per cent, compared with 10.4 per cent in the fourth quarter and 5.5 per cent in the year-ago period.

However, in Bunnings UK and Ireland, same-store sales fell 11.9 per cent as stores were refurbished.

Kmart performed well, with same-store sales up 4.9 per cent and total sales rising 9 per cent to $1.36 billion. This followed same-store sales growth of 4.7 per cent in the June quarter and 8.2 per cent in the year-ago period.

But Target continues to struggle, with comparable store sales slumping 6.4 per cent after falling 3.2 per cent in the June quarter and 21.9 per cent in the September quarter last year.

Officeworks also regained momentum after abandoning plans for an IPO, with sales rising 7.8 per cent compared with 3.5 per cent in the June quarter and 7.5 per cent a year ago.