Coles remains ‘solid’ during a year of ‘substantial’ change

Coles Group sales revenue (excluding fuel sales and hotels) increased by 3.1 per cent to $35 billion for FY19.

Sales revenue growth was seen across Supermarkets, Liquor and Express.

Coles CEO Steven Cain says Coles has delivered a solid performance in the face of a rapidly changing retail landscape.

“It has been a year of substantial change for Coles following the successful demerger and ASX listing from Wesfarmers in November 2018,” he said.

“As highlighted at our Investor Day in June, consumer behaviours are changing faster than ever, we are heading into the most competitive period in Coles’ history, and there are significant industry wide cost headwinds.

“With the return to profit growth in our core supermarkets division we have made a solid start to our four-year transformation program. Delivery of our sales growth strategy and the $1 billion Smarter Selling program will be critical to Group EBIT growth.”

Express

Convenience store sales growth was 1.2 per cent for the year and 0.1 per cent on a comparable sales growth basis. This, says Coles, is largely a result of declining tobacco sales.

For the fourth quarter, convenience store sales growth decreased by 0.5 per cent and on a comparable sales basis, declined by 2.3 per cent.

Outside of tobacco, Coles says the trends were positive with the food-to-go (FTG) category growing at double digit rates.

According to Coles, it continues to roll-out convenience offerings in store, delivering healthy meal solutions with the FTG offer now rolled out to 93 per cent of stores. Coles says Express has an “extensive” network. During the year, six new sites were opened, and three sites closed, taking the total network to 714 sites.

Fuel volumes declined by 13 per cent during the year with comparable fuel volumes declining by 13.7 per cent.

In February 2019, Coles announced the New Alliance Agreement with Viva Energy. This now sets the price of retail fuel while Coles earns a commission on fuel volumes sold throughout the network.

Supermarket

Supermarkets sales revenue was $30.9 billion for FY19. This is an increase of 3.2 per cent on the prior year, with comparable sales growth of 2.7 per cent.

For the fourth quarter, supermarkets sales revenue increased by three per cent. Comparable sales growth was 2.2 per cent relative to the prior corresponding period. This is 47th consecutive quarter of positive comparable sales growth.

Sales revenue growth, says Coles, was driven by online, new stores and successful collectable campaigns (eg, Little Shop and Fresh Stikeez).

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