Coles shares rebounded yesterday after its first-quarter sales performance was better than expected by analysts.
Coles shares had fallen on Monday on an analyst downgrade and forecasts that same-store sales in the company’s supermarkets business would fall by around 0.4%.
Topline sales grew 1.8% to $8,695 million in the quarter despite it cycling the hugely successful Little Shop promotion from the first quarter of 2018-19.
Coles shares rose more than 3% on the day to end at $15.01.
Rival Woolworths releases its first-quarter sales figures this morning (Wednesday).
Supermarket sales grew 1.6% over the prior corresponding period to $7,705 million and 0.1% on a comparable basis. This was driven by the Little Shop 2 campaign, price inflation of 1.4%, strong online sales growth, and rising sales of Coles’ Own Brands.
And Coles reckons the momentum in supermarkets is still happening;
“In the early part of the second quarter, Supermarkets comparable sales growth has trended toward the level achieved in the fourth quarter of the 2019 financial year,” the company said in yesterday’s update.
The retailer’s Liquor segment saw a 3.5% lift in sales to $726 million and the Express segment posted a 3.1% increase in sales to $264 million. Sales were up 0.7% and 0.4%, respectively, on a comparable basis.
While the Express segment benefited from more competitive fuel pricing and the Little Shop 2 campaign Coles pointed out that it saw the first quarter of fuel volume growth in four years. While Coles no longer benefits from fuel sales due to its arrangement with Viva Energy Group, the increased traffic helped drive Convenience sales growth.
Coles CEO Steven Cain said in yesterday’s update: “The refreshed strategy we set out to Win in Our Second Century has helped us to deliver a positive set of results for our first quarter.
“The increased sales momentum we are seeing in the second quarter demonstrates that the changes we are making to Inspire Customers are already making a difference,” he said.