Saturday, April 20, 2024

Coles sales rise, profits drop

Coles has released its FY24 half-year results, with Group sales revenue rising by 6.8% to $22.2 billion and net profit falling 3.6% to $594 million.

Supermarkets

Supermarket revenue increased 4.9% to $19.8 billion. Excluding tobacco, sales revenue increased by 6.2% (6.5% in the second quarter).

According to the retailer, this growth was driven by the successful execution of key seasonal events including Christmas, Halloween and Father’s Day and a positive customer response to the Curtis Stone BBQ continuity campaign.

Sales revenue was also supported by improvements in availability with delivered in full (DIF) and delivered in full on time (DIFOT) availability metrics increasing to 96% (90% in 2H23) and 92% (84% in 2H23) of pre-Covid-19 levels, respectively.

During the period, Coles launched the ‘Great Value, Hands Down’ campaign with the prices on more than 500 products dropped, including many essential staples. More than 1300 products were placed on everyday low prices.

Sales revenue growth across the retailer’s Exclusive to Coles portfolio increased by 7.6% to $6.8 billion with volume growth of 4.6%.

E-commerce sales increased by 29.2% to $1.8 billion (33.5% in the second quarter) with penetration at 9.1% said to be driven by a strong performance in seasonal events, particularly Christmas and Black Friday, improvements in availability, enhancements to the customer experience and continued network expansion.

In the second quarter, total supermarkets price inflation of 3% moderated slightly compared to 3.1% in the first quarter. Inflation excluding tobacco and fresh was 4% in the second quarter (5.7% in the first quarter) and was said to have been largely driven by dairy as a result of higher farmgate milk prices and higher commodity prices including cheese and eggs. Fresh inflation was 0.4% in the second quarter compared to deflation of 2.3% in the first quarter.

During the half, Coles completed 11 store renewals, including five Format A and one Coles Local store. Coles also opened five new stores and closed one store, taking the total network to 850 supermarkets across Australia.

Liquor

Liquor sales revenue increased by 1.8% to $2 billion.

During the half, Coles says customers were increasingly seeking value and managing their overall spend.

Product innovation is said to have been strong driver of growth during the half, particularly in the ready-to-drink (RTD) category with several first to market products introduced.

Supply side inflation remained elevated, driven by supplier cost price increases together with the August excise in beer, spirits and RTDs.

E-commerce revenue grew by 14.9% with penetration at 6.4% (7.6% including Coles Online).

During the half, 71 store renewals were completed, 10 new stores were opened, and three stores closed across the Liquorland, Vintage Cellars and First Choice banners. At the end of the period, the portfolio comprised 964 stores.

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