Coles achieved supermarkets sales revenue of $9.5 billion for the first quarter of FY25, up 3.5% (4.9% excluding tobacco).
The retailer says the sales growth was supported by its Winter and Spring value campaigns, promotional activity, the Winter of Sports giveaway campaign and strong eCommerce growth.
Exclusive to Coles sales revenue increased by 4.5% to $3.3 billion with solid volume growth, particularly in the food category.
“Cost of living remains a challenge for many of our customers, and we are focused on helping them find value in our stores through weekly specials, value campaigns, Flybuys and exclusive brands,” said Coles Group CEO Leah Weckert.
Coles has made a number of significant investments in value across the Exclusive to Coles portfolio, including in cheese and everyday staples in the Coles Simply range. Coles Simply brand awareness continues to grow, with the retailer reporting a significant uplift in sales of a number of key categories. Coles Finest also continued to resonate with customers, resulting in sales revenue growth of 8.9%.
During the quarter, Coles opened one new store, taking the total network to 857 supermarkets.
Inflation steady
Total supermarkets price inflation remained steady at 1.5% in the first quarter.
“Pleasingly for customers, meat, dairy, health & beauty and homecare categories were all in deflation during the quarter,” said Ms Weckert. “Overall supermarkets inflation, excluding tobacco, declined to 1%, remaining well below historic levels.”
Ongoing eCommerce growth
eCommerce sales increased by 22.4% to $1.0 billion with penetration growing to 10.8%. Coles says strong sales growth was experienced across both next day and same day home delivery and Click & Collect.
Growth was delivered through the expansion of Coles’ Rapid offer, with increased population coverage and available slots, Coles App and website enhancements, including increased personalisation and integration of taste.com.au shoppable recipes, and targeted customer offers.
This led to increases in digital engagement with growth in Coles App monthly active users of 50.8%. Strong gains were also experienced in Online NPS, driven by improvements in availability, delivery times and ease of using the website.
Liquor
Liquor sales revenue of $851 million for the first quarter was flat on the prior corresponding period with comparable sales declining by 4.4%, impacted by the subdued economic environment and constrained discretionary spending.
In September, Coles announced a pilot to consolidate banners under the Liquorland brand with selected Vintage Cellars to be converted to Liquorland Cellars and participating First Choice Liquor Market stores to be rebranded as Liquorland Warehouse. Commencing in November, the pilot will be implemented in all stores across South Australia and a small number of stores in Victoria and Queensland.
Coles expects the consolidation to provide a more compelling customer offer by bringing the best elements of Liquorland, First Choice Liquor Market and Vintage Cellars together under its largest and most recognised brand.
Supply chain modernisation update
During the period, Coles opened both of its Victorian and New South Wales CFCs and commenced transitioning next day home delivery orders from stores in metropolitan Melbourne and Sydney. The retailer is ahead of schedule with the transition of stores which is now expected to be completed by mid-November, and reports early positive outcomes across a range of customer experience metrics, including availability and perfect order rates.
Coles announced it is investing $880 million to develop a new ambient Automated Distribution Centre (ADC) in Truganina, Victoria in partnership with WITRON Australia.
The facility will have approximately 15% more capacity than Coles’ NSW and Queensland ADCs, with the ability to process 4.6 million cartons per week. It is expected to service all stores in Victoria and Tasmania and will also integrate into Coles’ existing supply chain in South Australia and Western Australia.
“This is another important step in Coles’ business transformation as we continue to invest in technology to enhance product availability for our customers and improve efficiency across our supply chain,” said Ms Weckert.
“This new automated distribution centre in Victoria will complement our existing sites in Queensland and NSW, enabling us to drive productivity and further capitalise on the advantages of world-leading automation technology.”
The project is expected to commence in FY25 and take up to five years to complete.
Outlook
In the early part of the second quarter, supermarkets sales revenue growth has remained broadly in line with the first quarter with volume growth supported by the investments we have been continuing to make in value across the portfolio to help support families in the lead up to Christmas.
“In preparation for the upcoming festive season we have launched many new products to make entertaining at home more delicious, easy and affordable,” said Ms Weckert.
“In-store execution, availability and quality continue to be priorities to improve customer experience.
“As our customers remain focused on cost-of-living pressures, we will continue to invest in value providing a competitive and compelling offer for Australian families. We are also investing for the future in projects such as our automated distribution centres. These will improve the efficiency of our business, enabling us to support further investment in the customer offer and deliver returns to our shareholders for many years to come,” said Ms Weckert.