Wesfarmers’ woes compounded by Coles supermarkets results

Posted by AFN Staff Writers on 21st February 2018

Coles has dragged down the Wesfarmers 2018 first half year financial profits with its earnings falling 14.1 per cent on its 2017 first half results.

Wesfarmers, Coles’ parent company, was also impacted negatively by its UK and Ireland Bunnings venture and Target department chain.

Wesfarmers net profit after tax totalled AUD $212 million for the first half period, down nearly 87 per cent on the prior corresponding period.

Wesfarmers attributed Coles earning decline to a planned investment in low prices for customers and service improvements.

“Coles maintained good sales momentum during the half, with transaction growth accelerating in the second quarter and reaching the highest level of quarterly comparable transaction growth in six quarters,” said Wesfarmers Managing Director, Rob Scott.

“The business continued to improve its customer offer across value, quality, product innovation and service, resulting in overall improvements in customer satisfaction metrics.

“Liquor progressed its transformation, continuing to generate positive comparable sales growth, while Coles Express’ earnings decreased due to changes in the commercial terms of its fuel supply arrangement.”

In total, Wesfarmers reported $1.3 billion in writedowns for Bunnings UK/Ireland and Target.

Scott said Bunnings UK/ Ireland experienced execution challenges as a result of the rapid repositioning of Homebase, the hardware network Wesfarmers acquired to transition into Bunnings stores.

Target’s troubles were attributed to tough competition.

The revitalisation of rival supermarket giant Woolworths Group led by innovative CEO Brad Banducci may be a factor in the problematic Coles results, but further key performance comparisons will be interesting to follow over the next few financial reporting periods.


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