Coles Group Limited is a subsidiary of Wesfarmers Limited (ASX: WES) and it is involved in the operations of owning and operating retail stores in Australia. On 16 March 2018, Wesfarmers announced that it is planning regarding the demerger of Coles division to create a separate company listed on ASX.
On 16 October 2018, Wesfarmers Limited announced the sales results of Coles retail for the first quarter of FY 2019. Coles Group’s results showed a continued good momentum, due to the successful “Little Shop” promotional campaign, improved in-store execution and investments in flybuys promotions.
Supermarket sales of Coles increased by 5.8 percent from $7,239 million in Q1 of FY 2018 to $7,657 million in Q1 of FY 2019. Driven by the significant growth in average customer basket size, units sold and transaction growth, comparable food sales uplifted by 5.1 per cent for the quarter.
The Liquor sales increased by 2.1 percent from $729 million in Q1 of FY 2018 to $744 million in Q1 of FY 2019. The Convenience sales increased by 2.5 percent from $1,402 million in Q1 of FY 2018 to $1,437 million in Q1 of FY 2019. Due to improvements in the overall food to-go offering and convenience range, Coles experienced growth in convenience store sales. The total sales of Coles increased by 5 percent from $9,370 million in Q1 of FY 2018 to $9,838 million in Q1 FY 2019. Sales in the first quarter of FY 2019 were driven by the highly successful ‘Coles Little Shop’ campaign, improved in-store execution and flybuys promotional campaigns.
Despite inflationary headwinds from the drought and seasonal impacts, Coles continued to achieve growth in fresh market share due to its continuous focus on improving the quality and range of fresh products. Coles Online is on track to cross $1,000 million of sales for the current financial year as it has achieved more than 30% sales growth for the quarter. Coles Group is continuously improving and optimizing its store network and it also opened 4 supermarkets during the quarter, due to which the company is having a total of 809 supermarkets at the end of the period.
In FY 2018, Coles sales revenue of $39,288 million was broadly in line with the prior year, with higher Coles Supermarket and Coles Liquor revenue offset by lower Coles Convenience revenue. Sales momentum continued to improve during the year, with fourth-quarter comparable food and liquor sales growth of 1.8 percent being achieved compared to 1.1 percent for the year. Coles’ earnings declined to $1,414 million in FY2018 primarily due to the annualization of the high level of investments made in the customer offer in the prior year, one-off items in the prior year, lower Coles Convenience earnings, and higher Supermarket team member costs following the implementation of a new enterprise agreement.
WES’s shares traded at $47.370 with a market capitalization of circa $53.49 billion as on 16 October 2018 (AEST 3:04 PM).
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