Coles earnings up on turnaround program

Posted by Nicole Eckersley on 25th February 2011

Wesfarmers has seen earnings in its its food retail division rise as it works to implement its turnaround strategy.

Coles said that for the half ended 2 January, EBIT was up 18.3% to $575 million , while revenue grew 5.9% to $16.06 billion.

Wesfarmers’ food and liquor division recorded a 22.1% rise in EBIT to $12.8 billion. Comparable-store sales were up 6.4%.

Revenue from Wesfarmers’ convenience division grew 3.9% to $3.2 billion, with comparable-store sales growth slowing to 1.5% against 4.8% a year earlier.

The company said the results were driven by “continuing improvements in value, product quality, store standards and service levels”, which are “resonating well with customers”.

Additionally it said that the earnings improvement reflects “good sales momentum and a comprehensive programme of work to reduce costs and waste, as well as to improve efficiency throughout the supply chain.”

The retailer said its turnaround is “progressing to plan” but that there is “significant work still to come”.

Coles said it is working to improve its ethical sourcing and animal welfare, ensuring all beef sold is hormone-free beef this year, removing caged eggs by 2013 and pork is sow-stall-free by 2014.

However, Coles noted that it faces challenges in supply due to the flood and cyclone in Queensland, as well as future inflation risks and a strong competitive environment.

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