Australia’s second largest supermarket group Coles has posted a strong increase in first half sales as its turnaround efforts continue to pay off.

Coles supermarket business booked revenues of A$15.16bn in the six months to 31 December, up 3.7% compared to A$14.62bn for the half-year of last year.

Speaking during a conference call with analysts, Wesfarmers chief executive Richard Goyder said that the turnaround at Coles was “on track”.

Detailing the supermarket operator’s focus, Coles CEO Ian McLeod emphasised that the company has worked to “improve quality”, particularly in fresh foods.

Coles has also looked to deliver “stronger value” by making more effective use of grocery promotions and improving its private label range, which has been reviewed, rebranded and repackaged, McLeod added.

In order to improve store standards and woo consumers, Coles has also invested in rejuvenating its store network, with more than 40 renewal stores now “on the ground”. The group said that it was “refining” its renewal formats for roll out in the remainder of the year.

However, looking to the next six months, Goyder sounded a note of caution on the consumer environment and warned that the end of government stimulus and rising interest rates could dent retail sales.

“We could well see some negative growth,” he commented.

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