Coles releases latest results

Coles has released its third quarter results this week, with supermarkets sales revenue at $7.7 billion.

This was a decrease of 6.1%, with comparable sales decreasing by 6.4%, as Coles cycled the elevated sales from Covid-19 in the prior corresponding period when supermarkets comparable sales growth was 13.1%. Coles was also cycling the Fresh Stikeez collectible campaign in the prior corresponding period.

Pleasingly, says Coles, customer satisfaction metrics improved during the quarter.

Coles Group CEO Steven Cain notes the “beginnings of a return to normality for Australians’ everyday lives”.

On this, Coles reports that at the end of the third quarter and in the first few weeks of the fourth quarter, consumer behaviour has started to normalise, including:

  • Australians enjoying Easter together, with Easter confectionery and entertaining among the strongest performing categories.
  • Customers returning to shopping centres and CBD stores, workers returning to offices and positive indicators that ‘local shopping’ is beginning to unwind.
  • Increased shopping trips and improved transaction growth supporting a recovery in impulse, convenience and food-to-go categories.
  • Sunday returning to the busiest trading day of the week supported by normalised routines of going to the office and children going back to school.

E-commerce

E-commerce sales grew by 49% with sales penetration increasing to 5.5% in the third quarter. This was up from 5.3% in the second quarter.

E-commerce B2C sales grew by 57% with B2B sales returning to growth in the third quarter.

Coles also notes that the perfect order rate reached a “record high” during the quarter because of improved availability.

Range

Customer-led range change activity, says Coles, continued with more than 130 range changes completed. Coles also delivered “trusted value” for customers with more than 400 products placed on EDLP.

Own Brand continued to deliver “value and innovation” for customers with sales in the third quarter of $2.5 billion. Over 260 new products were launched in the quarter.

Own Brand won a total of seven awards in the third quarter including four Choice awards across products such as Coles’ Hot Cross Buns, Coles 100% Australian Durum Wheat Spaghetti and Organic Wholemeal Spaghetti.

Own Brand also won three Royal Sydney Cheese and Dairy Show Awards for Coles’ Finest Cheeses.

Deflation

Coles recorded deflation excluding tobacco and fresh of 0.8% for the third quarter.

Total supermarkets price deflation of 0.2% was recorded for the third quarter, the first quarterly deflation since FY18.

Deflation in the quarter, according to Coles, was largely a result of the cycling of pantry stocking which led to uncertainty of supply and lower promotional mix, and fresh produce deflation particularly in vegetables, as a result of droughts and bushfires in the prior corresponding period.

Renewals and store openings

Coles completed 18 renewals during the quarter. This included three Format A and 14 Format C stores.

For the quarter, there was one new store opening and three closures.

At the end of the period there were 831 supermarkets.

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