Coles (ASX:COL) boosts Q3 revenue; sounds price rise warning

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Coles (ASX:COL) boosts Q3 revenue; sounds price rise warning

Coles (ASX:COL) boosts Q3 revenue; sounds price rise warning
Image source: © Rawpixelimages | Megapixl.com

Highlights

  • Coles Group announced a 3.9% rise in gross retail sales.

  • The retail giant’s supermarket segment faced pressure from floods.

  • Liquor sales revenue rose by 2.9%.

Coles Group Ltd (ASX:COL) on Thursday announced a 3.9% rise in group’s gross retail sales to AU$9.3 billion and 3.6% surge in group sales revenue to AU$9.1 billion in the third quarter of 2022.

The retail giant’s supermarket segment faced pressure from flooding in Queensland and New South Wales (NSW), resulting in 130 stores closing for a part of the quarter. Supermarkets accounted for AU$8.2 billion of sales revenue for the 12 weeks from 3 January 2022 to 27 March 2022, Coles said in its latest ASX filing.

Liquor sales revenue rose by 2.9% to AU$781 million despite the impact of the significant flood events.

In Express segment, convenience (c-store) sales revenue fell 2.2% to AU$269 million, with fuel volumes getting impacted by COVID-19 restrictions.

The company said that increased cases of Omicron “increased absenteeism with a significant number of Coles and supplier team members required to isolate”.

The company also cited supply chain woes in part linked to rail disruption in South Australia, the Northern Territory and Western Australia.

Despite decent earnings, Coles’ shares were trading at AU$18.29, down 0.38% at 10:10 AM (AEST).

Coles warns about rise in cost of living

Supermarket giant Coles has warned the cost of living will continue to rise. The company was forced to raise prices as inflation surged in the third quarter.

“Cost price inflation impacting suppliers as a result of increased raw material, commodity, shipping and fuel costs,” the company said.

According to the release, the supermarket division’s product prices soared 3.3% from January to March, a significant surge on the previous quarter. Coles attributed the rise in product prices to suppliers’ request to increase rates to offset increased fuel, raw material and commodity costs and shipping & supply chain delays. Coles expects this price rise from suppliers to continue through the fourth quarter and into the next fiscal.

What does the management say?

Commenting on the results, Coles Chief Executive Officer (CEO) Steven Cain said the company was offering additional discounts to customers to provide them some relief.

“Coles Group remains focused on our commitment to deliver trusted value for Australian families amid growing cost of living pressures driven by both local and global supply circumstances,” he said.

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