Coles suffers sales slow down in first quarter, FY18

Posted by Nicholas Nakos on 25th October 2017

Coles Supermarkets has reported minuscule sales growth for the first quarter of its 2018 financial year compared with the level of sales in the same period of the previous year.

Falling fresh produce prices have taken their toll on the financial results.

Parent company Wesfarmers of Coles supermarkets, in releasing its results saying its headline food and liquor sales were up 1.5 per cent on the prior corresponding period.

However, comparable food and liquor sales only increased by 0.4 per cent with comparable food results alone only increased by 0.3 per cent.

The total first quarter sales for 2018 were $7,968 million.

Food and liquor prices fell by 2.3 per cent during the quarter which Wesfarmers said reflected   “an acceleration in-supply driven fresh produce deflation during the period, particularly in soft vegetables, to the highest level since 2016.”

Excluding fresh produce, prices fell 1.3 per cent during the quarter.

Coles Managing Director, John Durkan, said excluding the drop in fresh produce prices, food and liquor comparable sales were broadly in line with the trend achieved in the 2017 financial year.

“As we outlined at our full year update in August [2017], we continue to proactively invest in value, quality, availability and service for our customers,” Durkan said.

“This underpinned continued improvements in transaction growth, unit growth and customer satisfaction in the quarter.

“We believe our focus on a customer-led strategy will ensure Coles maintains its strong market position in a highly competitive market, and will deliver sustainable long-term growth, he said.”

Durkan said Coles will continue to try an increase its share of the fresh produce market, improve its store network, invest in new routes to market and simplify its business in terms of range and cost of doing business.

Coles opened one supermarket and closed four during the quarter. It now has a total of 798 supermarkets in Australia.

During the quarter, 16 supermarket renewals were completed.

Liquorland leads

Durkan said that Wesfarmers liquor business continued to build on its sales momentum largely led by Liquorland.

“The transformation to date has seen a focus on improving price competiveness, range and the quality of the store network,” Durkan said.

“Further opportunities remain as we continue to enhance our offering to customers through product innovation, exclusive brands, new channels and improved service.”

Liquor added to its store network, opening 11 new stores and closing six during the quarter, with a total of 888 liquor stores operating in Australia.

Convenience sales fall

The Total Coles Express sales, including fuel, for the quarter were $1,402 million.

Coles Express sales fell 9.5 per cent when compared to the prior corresponding period due to low petrol prices.

Headline convenience store sales increased 2.7 per cent but only 0.2 per cent on a comparable store basis.

Wesfarmers said its strategy is to manage its convenience business for an appropriate return and to focus on growing its convenience offering.

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