Coles has reported supermarkets sales revenue of $8.6 billion for the first quarter, an increase of 1.8% on the prior corresponding period, while convenience store sales revenue was $262 million for the first quarter, a decline of 10.1% on the prior corresponding period.
In the first quarter, supermarkets sales increased by 1.8% with two-year headline sales growth of 11.9% (relative to 9.4% in the fourth quarter of FY21) as lockdowns across NSW, the ACT and Victoria continued. As a result of the lockdowns, there was a return to local shopping at the expense of shopping centres, as well as increased demand for e-commerce, resulting in strong sales growth of 48% with two-year growth of 132% (relative to 79% in the fourth quarter of FY21), while online penetration of 9% was recorded in the quarter.
Liquor sales increased by 2.6% with two-year headline sales growth of 20.4% (relative to 12.5% in the fourth quarter of FY21) as a result of elevated sales from Covid-19 and the closure of on-premise venues in NSW, the ACT and Victoria for most of the quarter.
In Express, reduced levels of traffic on the road as a result of Covid-19 lockdown restrictions led to a decrease in convenience sales revenue of 10.1% (relative to an increase of 2.2% in the fourth quarter of FY21) with two-year headline sales declining by 0.8%.
The Delta variant of Covid-19 caused significant disruptions in the first quarter across Coles’ stores, supply chain and to the customers and communities.
Coles Group CEO Steven Cain said: “As we embarked on our third year of strategy execution, the Covid-19 Delta strain presented significant challenges in the quarter, which are now beginning to ease as vaccination rates increase. I would like to thank the Coles team, our suppliers and community partners who have done an extraordinary job in this 18-month battle with Covid-19 to ensure continuity of supply as an essential service. We are now looking forward to providing a safe and happy Christmas and summer season, serving Australians with more sustainable, great value and easy entertaining inspiration – for what we expect will be a record number of smaller gatherings for families and friends.”
Supermarkets – key highlights
Supermarkets sales revenue was $8.6 billion for the first quarter, an increase of 1.8% on the prior corresponding period, with comparable sales increasing by 1.4%. On a two-year basis, Supermarkets headline sales growth increased to 11.9% in the first quarter compared to 9.4% achieved in the fourth quarter of FY21, while two-year comparable sales growth in the first quarter increased to 11.1% compared to 9.2% achieved in the fourth quarter of FY21.
Sales growth was supported by ongoing at-home consumption with NSW, the ACT and Victoria in lockdown during the quarter and a strong e-commerce result, while the value and free picnicware campaigns resonated with customers.
E-commerce sales grew by 48% with sales penetration increasing to 9% in the first quarter, up from 6% in the fourth quarter of FY21. The strong result was driven by elevated demand as a result of Covid-19 lockdowns and in response, Coles Online more than doubled capacity in NSW through the addition of 17 home delivery stores, while eight stores were added in Victoria and capacity was extended in existing Click & Collect locations across both states.
Supermarkets recorded deflation excluding tobacco and fresh of 0.8% for the first quarter, moderating from 3.7% recorded in the fourth quarter of FY21. Total Supermarkets price deflation of 0.3% was recorded for the first quarter, the third consecutive quarter of deflation although moderating from 1.1% in the fourth quarter of FY21. This was largely a result of packaged as the impact from cycling lower promotional activity in the fourth quarter of FY21 normalised, partly offset by easing inflation in tobacco as a result of the annual tobacco excise increase not occurring in September 2021. Fresh deflation was driven by fresh produce, largely fruit, partly offset by continued inflation in meat from elevated livestock prices.
Coles completed four renewals during the quarter with three Format C and one Coles Local store in Camberwell, Victoria. For the quarter, two new store openings were completed taking the total network to 836 Supermarkets.
Express – key highlights
Convenience store sales revenue was $262 million for the first quarter, a decrease of 10.1% on the prior corresponding period, with comparable convenience store sales decreasing by 9.5%. Sales growth was negatively impacted by lower forecourt traffic due to lockdowns in NSW, the ACT and Victoria, as well as cycling strong tobacco sales in the prior corresponding period. Excluding these states, two-year sales growth has remained strong, increasing by 10%, while food-to-go (including coffee) was the key driver of growth at the category level.
Headline and comparable fuel volumes declined by 7.5% during the quarter driven by lockdown restrictions impacting traffic and mobility across NSW, the ACT and Victoria. As a result, average weekly fuel volumes were 48.4mL per week. Excluding lockdown states, fuel volumes increased by 2% compared to the prior corresponding period.
Express continued its renewal activity with its Alliance partner with a further 55 sites renewed. During the quarter, four sites were closed, taking the total network to 713 sites.
