Coles outperforms Woolies

18 Apr, 2013 09:14 AM

COLES has posted its fastest sales growth in two years as the resurrection of the once ailing supermarket group enters its fifth year and the retailer continues to strip away customers from rival Woolworths as well as other food stores.

Wesfarmers, the Perth-based conglomerate that owns Coles, said this morning that its flagship Coles food and liquor division recorded third quarter sales of $6.49 billion, up 6.6 per cent for the period.

Like-for-like sales for the key division rose 5.3 per cent. It was the best growth rate notched up by Cole since the third quarter of 2011. Coles achieved its 16th consecutive quarter of growth in like-for-like sales.

Total sales for Coles, which combines its food and liquor business as well as convenience stores, increased 6.4 per cent to $8.35 billion in the quarter.

Food and liquor sales were up 5.5 per cent to $20.8 billion for the financial year to date.

All of Wesfarmers key retail operations (supermarkets, hardware, office supplies and general merchandise) posted positive sales growth for the third quarter.

Coles managing director Ian McLeod said good comparative sales growth was driven by strong volume growth.

The supermarket chain recorded overall food and liquor price deflation of 1.3 per cent in the third quarter, with price deflation of 1.7 per cent recorded for the financial year to date.

Coles shares were up 23 cents, or 0.6 per cent, at $42.12 in morning trade.

The restructure and revival of Coles, once an underperforming supermarket group, continues to take shape as the junior supermarket in Australia steals the spotlight and customers from its much bigger rival Woolworths.

Coles remains in front of Woolworths in terms of sales growth. Last week Woolworths said its Australian food and liquor division had increased sales by 5.6 per cent to $9.945 billion.

Comparable store sales for the division, which accounts for nearly 70 per cent of Woolworths' group sales, increased 3.8 per cent.

Mr McLeod said Coles customers had benefited from the supermarket’s focus on quality fresh food and a better shopping experience, as well as continued lower prices in the face of a higher cost of living for average Australians.

During the quarter Coles opened four supermarkets and closed three taking total number of stores to 754. Coles also completed a further eight refurbishments bringing the total number of Coles supermarkets to undergo a renewal to 313.

Elsewhere among Wesfarmers retail businesses, its Bunnings hardware chain increased total quarterly sales by 6.7 per cent to $1.858 billion, Officeworks had a 0.5 per cent lift in sales to $417 million.

Its underperforming Target business had flat sales, up 1 per cent to $699 million. This month Target lost its CEO of less than two years and will have its third boss in as many years who will attempt to lift the performance of the merchandise store.

Stablemate Kmart continues to shine, its quarterly sales rose 3.6 per cent to $842 million.



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