A first look at Coles’ demerger details

The Australian
Wesfarmers has released the scheme booklet for its $20 billion demerger of Coles which has revealed that the supermarket business’ liquor arm is pushing ahead well with its transformation to grow earnings – allbeit with some hiccups – but that its Coles convenience stores are facing dwindling pre-tax profits.
The demerger documents released this afternoon show Coles liquor had sales of $3.3 billion in 2018 and pre-tax earnings of $130m while its convenience stores had sales of $5.8bn and pre-tax earnings of $133m.
But the once struggling liquor arm of Coles, which includes its Vintage Cellars and Liquorland banners, has begun to turnaround after underperforming for a while.
The Coles demerger scheme booklet shows that its liquor business on a pro-forma basis had pre-tax earnings of $100m in fiscal 2016, rising to $138m in 2017 and slipping to $130m in 2018.
However, Coles convenience stores have found the path a lot rougher going, with the division reporting earnings of $190m in 2016, and the same in 2017 falling to $133m in fiscal 2018.