Australia’s leading retailer, Coles Group Limited (ASX: COL) has delivered a solid outcome in the third quarter of FY 2019. Despite operating in the highly competitive retail sector, the company was able to achieve growth in the sales revenue of its supermarkets and liquor sector.
The company’s supermarkets sales revenue increased by 3.2% in the 3rd quarter to $7,272 million as compared to the previous corresponding period (pcp), supported by a successful ‘Fresh Stikeez’ promotional campaign which drove high customer engagement. Besides this, the company also made progress in expanding and improving its store network during the quarter. In the March quarter, the company completed 7 refurbishments, opened 3 supermarkets and closed one supermarket, ending the period with 818 supermarkets.
During the quarter, the company also witnessed strong growth in average basket size which was largely underpinned by items per basket growth and price inflation in fresh categories. Coles Online has delivered strong growth during the quarter with sales of more than $1.0 billion achieved on a rolling 12-month basis. Further, the company has also increased its focus to improve the profitability in the channel.
During the March quarter, the company made further investment in the Click & Collect channel, contributing strongly to online sales growth. The company recently entered into an exclusive partnership with Ocado Group, under which two fully automated Customer Fulfilment Centres will be built, one located in each of Melbourne and Sydney prior to the end of the 2023 financial year.
During the quarter, the company partnered with Uber Eats and eBay to provide more convenient ways for customers to shop with Coles, making the life of the customers easier.
In its Liquor segment, the company reported sales revenue of $735 million, up 4.3% on pcp. The sales performance in the liquor segment was driven by both improvements in average basket size and transaction numbers. The trading conditions for Liquorland were impacted by a subdued market and lower promotional intensity in beer and along with it the trading conditions for Vintage Cellars remained challenging during the period, mainly driven by softer growth in the wine category and two store closures.
In its express segment, the company reported sales revenue of $874 million with Convenience store (c-store) sales growth of 1.5%. The comparable c-store sales declined by 0.5% in the March quarter, driven by lower fuel transactions and slowing tobacco growth in line with a softer market. Food-to-go (FTG) category performed strongly during the quarter, underpinning improvements in shop-only transactions during the period.
Last month, the company entered into an incorporated Joint Venture with Australian Venue Co (AVC) to manage the day-to-day operations of the hotels business and its Queensland retail liquor business.
In the past three months, the share price of the company increased by 0.08% as on 26 April 2019. At the time of writing, i.e., on 29 April 2019 AEST 02:49 PM, the stock of the company was trading at a price of A$12.650, up by 0.397% during the day’s trade with the market capitalisation of ~A$16.81 Bn.
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