Supermarket giant Coles has posted growth in the March quarter despite the discounting competition between rival Woolworths. Food and liquor sales rose 5.4 per cent to $7.1bn during the first three months of 2015. When stripping out the effects of store openings and closings, growth in comparable sales was 3.8 per cent, slightly below the 4.5 per cent recorded in the previous quarter. Sales for the financial year to date for comparable food and liquor increased 4 per cent. After adjusting for the later timing of Easter in the 2014 financial year, comparable food and liquor sales fell 40 basis points and Coles experienced a 1 per cent price deflation in the sector. The inhibited growth in this sector was attributed to a tobacco excise increase and a meat cost price increase as a result of tighter supply conditions and increased overseas demand.
Coles is owned by Wesfarmers (ASX:WES), one of Australia’s largest public companies. Coles, Kmart and Target stores under the control of Wesfarmers all saw a significant uptick in home improvement and office supplies sales. Total home improvement and office supplies sales increased 2.1 per cent compared to the previous corresponding period. Managing director of the supermarket John Durkan said the improved sales were a result of the company’s continued commitment to lower prices while offering quality fresh food. “We are constantly seeking new ways to invest in lowering the cost of shopping in Australia,” he said. “During the quarter, Coles lowered the prices of over 150 items as part of its Every Day Value program, including household staples such as bread, cheese, sugar and rice.”
Shares of Wesfarmers are down 13c, or .30 per cent, at $43.02 per share around 1:55pm on Wednesday. WES is flat over the last 12 months but has risen 3 per cent so far this year.
Author: Imran Valibhoy
Apr 29, 2015
Since Joining the firm in 2006, Imran has worked on a range of M&A and Capital Market transactions in the natural resources, mining as well as projects in the renewable energy sector. Prior to joining Wise-owl, Imran worked at Euroz Securities in Perth, aiding in the advisory and valuation of companies in the mining and industrial sectors in Australia. Imran has a Masters in Banking & Finance from City University's Class Business School in London and a Bacheloor degree in Commerce from UWA.