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Coles Express takes a hit on first quarter sales

Wesfarmers has recorded a weakened first quarter for its Coles Express convenience group, with a 13.7 per cent drop in sales year-on-year.

Released yesterday, the First Quarter Retail Sales Results showed 7.4 per cent growth in headline convenience store sales, while the comparable store basis jumped 3.2 per cent, bolstering otherwise poor performance with ongoing investments in convenience shop offers such as the improvements in the ‘food-to-go’ and Every Day Value promotions.

Coles Express sales for the quarter, including fuel, were $1.549 billion, a 13.7 per cent drop on the first quarter 2016 ($1.795 billion) that was attributed to lower fuel volumes and lower fuel prices.

Headline fuel volumes decreased by 7.0 per cent for the first quarter while comparable fuel volumes decreased 10.7 per cent, figures Wesfarmers indicated were affected by competitor site upgrades and a lower number of site openings compares to other operators.

Coles Express opened two new sites the first quarter, increasing the store network to 692 sites.

Wesfarmers managing director Richard Goyder said Coles’ food and liquor group fared much better, with 2.9 per cent growth in headline sales for the quarter, year-on-year.

“Coles continues to invest in value, service and quality, supported by ongoing efficiency improvements across the business,” he said.

With sales for the quarter up to $7.9 billion, comparable food and liquor sales increased 1.8 per cent  and food store sales increased 1.7 per cent, with price deflation reduced to 1.0 per cent.

Coles managing director John Durkan described the sales growth as “satisfactory”, citing current market conditions as indicative of the importance of Coles’ customer-led strategy.

“In our food business, we’ve seen a change in market conditions over the past year,” he said.

“Market growth has slowed, while at the same time there has been an increase in competitive intensity.

Mr Durkan said Coles’ strategy allowed flexibility to respond during periods of elevated competition.

“Our ambition to be Australia’s best food retailer means that we will continue to invest in improving our customer offer year-after-year to deliver sustainable long-term growth,” he said.

During the first quarter Coles opened four new supermarkets and closed three, leaving a current total of 788 supermarkets.

In the same period Coles opened eight new liquor stores and closed four, for a current total of 869 stores and 89 hotels.

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