Why Coles Group (ASX:COL) shares could be in focus today?

Summary

  • Coles Group (ASX:COL) said the benefits from its “smarter selling” program may exceed AU$200 million in FY22
  • The supermarket titan expects capital expenditure of AU$1.4 billion in FY22.
  • Coles said its strong cash generation supported its commitment to the industry leading dividend payout ratio.

Coles Group Ltd (ASX:COL) on Thursday said that the benefits from its “smarter selling” program may exceed AU$200 million in FY22.

The supermarket group held its virtual Strategy Day this morning, where it said that it expects capital expenditure of AU$1.4billion in FY22 with investments in several key growth areas such as:

  • Witron and Ocado automation programs
  • Omnichannel and offer expansion for customers
  • Smarter Selling, including front end transformation
  • Fresh Produce Easy Ordering
  • Coles local and liquor land renewals and new space

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Source: ©Miflippo  | Megapixl.com

The capex for Witron and Ocado was expected to be up to nearly AU$75 million in FY22 and nearly AU$160 million in FY23.

The net earnings before interest and tax (EBIT) benefits from Witron may start from FY25. Coles said that the sales benefits from Ocado were expected from FY24 as the customer fulfilment centres build their volumes.

The company pegs its depreciation and amortisation to be between AU$1.67 billion and AU$1.72 billion in FY22 due to increasing investment, as well as increased AASB16 leasing impacts including the Witron Queensland site being recognised on the balance sheet as a Right of Use asset.

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Coles said its strong cash generation supported its commitment to the industry leading dividend payout ratio.

Source: © Herrbullermann  | Megapixl.com

Stock performance

On Wednesday, 17 June 2021, the shares closed at AU$17.05, up 0.35%, or 0.060 points as against the previous closing on Wednesday, 16 June 2021. Coles Group competes with Treasury Wine Estates Ltd (ASX:TWE) and Metcash Ltd (ASX:MTS, Woolworths Group Ltd (ASX:WOW), Coles Group Ltd (ASX:COL), among others in the consumer sector.

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