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In a remarkable Tuesday surge, the Coles Group Ltd (ASX: COL) share price increased by 5.79%, settling at AU$16.80. This upswing follows the highly anticipated release of Coles' half-year results, shedding light on the supermarket giant's recent performance.
Key financial metrics
Coles reported a robust 3.7% increase in sales revenue, reaching an impressive AU$22,216 million for the six months ending 31 December. Even when factoring in discontinued operations from the prior corresponding period, Coles demonstrated a resilient performance.
Despite a 2.8% dip in Earnings Before Interest, Tax, Depreciation, and Amortization (EBITDA) to AU$1,847 million, the underlying EBITDA witnessed a positive upswing of 4.1%, reaching AU$1,900 million. This nuanced performance reveals Coles' ability to navigate complexities within its operations.
Profit after tax experienced an 8.4% decline to AU$589 million. However, when focusing on continuing operations, the underlying profit after tax was down by a modest 0.3% to AU$626 million. The fully franked interim dividend remained steady at 36 cents per share, mirroring the prior corresponding period.
Coles' sales growth on a continuing operations basis was noteworthy, surging by 6.8% year on year. This was fueled by a 4.9% increase in supermarkets revenue, a 1.8% boost in liquor revenue, and a substantial AU$450 million in other revenue streams.
CEO's Response
Coles' CEO, Leah Weckert, countered claims of exploiting customers amid the cost of living crisis. Weckert highlighted the company's commitment to delivering value through initiatives like the "Great Value, Hands Down" campaign, Exclusive to Coles products, weekly specials, and the Flybuys loyalty program.
Forward Focus
Coles is set to conquer the second half, with Supermarkets sales revenue growing by 4.9% in the initial eight weeks of the third quarter. This growth is attributed to effective execution of value campaigns and enhanced availability, showcasing Coles' strategic prowess.
Liquor Challenges
Liquor sales revenue faced a minor setback, declining by 2.2% in the first eight weeks of the third quarter. This dip is linked to lower discretionary spending, presenting an area where Coles aims to recalibrate its approach.
Conclusion
In conclusion, Coles Group Ltd navigated the complexities of the first half with a blend of resilience and strategic initiatives. The company's commitment to delivering value to customers, coupled with a strong start to the second half, positions Coles for continued success in a dynamic market.
