Coles earnings slip

Earnings before interest and tax (EBIT) at Coles fell 2.6 per cent to $920 million for the half-year ended December 31, 2016.

Excluding the gains on the sale of Coles’ interest in a number of joint-venture properties to ISPT, earnings fell 6.8 per cent. Food and liquor recorded sales growth of 2.2 per cent, building on the strong growth in the previous corresponding period.

“Coles’ steadfast commitment to its customer-led strategy delivered continued growth in comparable transactions, basket size and sales per square metre during the half, with record results achieved on key customer feedback measures over the Christmas trading period,” said Managing Director Richard Goyder.

“The decline in earnings was driven by lower margins following increased investments in value, which were weighted towards the second quarter, including through the absorption of cost price increases in meat. Costs of doing business were well managed, partially offsetting lower gross margins, despite Coles continuing to invest to enhance the customer experience through better quality, availability and service.”

The transformation of Coles Liquor progressed in line with expectations, with the business delivering positive comparable sales growth underpinned by transaction growth. Revenue at Coles Express fell, due to lower fuel volumes and lower fuel prices, despite continued growth in store sales.

Coles’ parent company, Wesfarmers, reported a net profit after tax of $1,577 million for the half-year, an increase of 13.2 per cent on the previous corresponding period.

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