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The share price of Coles Group Ltd (ASX: COL) experienced a slight decline on Tuesday, with the supermarket giant's shares falling by 0.25% to AU$16.23 apiece at the time of writing.
Investors reacted to the company's third quarter sales update, resulting in a dip in Coles' share price.
Key Highlights of the Third Quarter Sales Update
Coles reported further robust sales growth during the three months ended 31 March, primarily driven by its supermarkets business.
Sales revenue from continuing operations increased by 6.4% to $10,033 million for the quarter. This growth was mainly propelled by a 5.1% rise in supermarkets sales to $9,065 million, offsetting a 1.9% decline in liquor sales.
Leah Weckert, CEO of Coles Group, expressed satisfaction with the quarter's performance, highlighting the strong execution of trade plans and the focus on delivering value and quality to customers. She also noted an increase in customer engagement with digital platforms and loyalty programs.
Supermarket Growth
Supermarkets sales revenue grew by 5.1% to $9.1 billion for the third quarter, with comparable sales growth of 4.2%. Excluding tobacco, sales revenue increased by 6.6% compared to the prior corresponding period.
The company attributed its momentum to successful trade events, including the Summer value campaign, as well as well-executed in-store and online trade events such as Australia Day, Valentine's Day, and the Pokémon Builders collectible campaign. Strong trade in the lead-up to Easter also contributed to sales growth.
Focus on Providing Value
Coles emphasized its commitment to providing value for customers during the quarter. Initiatives such as the summer value campaign, expansion of the Coles Simply range, and focus on exclusives contributed to its success. Exclusive to Coles revenue increased by 8.8% to $3.1 billion, driven by strong volume growth.
Challenges in Liquor Business
In contrast, Coles' liquor business faced challenges during the quarter, with liquor sales revenue declining by 1.9% to $786 million and comparable sales declining by 3.1%. This decline was attributed to reduced discretionary spending on liquor and the transition away from less profitable bulk sales.
Comparison to Expectations
While the sales result was largely in line with expectations, some investors may have anticipated better performance from the company.
