Coles Booms, But A Slowdown Looms

By Glenn Dyer | More Articles by Glenn Dyer

More good news from a leading retailer about the positive impact the COVID-19 pandemic and its outcome continues to have on sales.

The now eased lockdown in Victoria and especially Melbourne saw has first-quarter sales at Coles rise by more than 10%.

Coles joins a long list of retailers confirming that the spurt in sales – especially online – in the final months of the June 30 year, have continued on into the September quarter and October.

Yesterday Super Retail Group was another to highlight the continuing upturn in sales post-COVID.

Other retailers include Adairs, Kogan, Temple and Webster, Premier Investments, Eagers.

In its first-quarter trading update on Wednesday, Coles said sales across the company for the three months to the end of September were up 10.4% on a comparable level, one of Coles’ highest-ever quarterly results.

But there were clear signs of a slowing in growth in October.

Shares in the firm closed up 2.7% at $17.68, still well below the most recent high of $19.07 in August.

Supermarket comparable (or same-store) sales rose 9.7% for the quarter to $8.46 billion, a result the company said was primarily driven by the state of Victoria and to a lesser extent NSW. Excluding Victoria, comparable sales growth was 7.7%.

Liquor sales jumped 17.8% for the quarter, and the company’s petrol station-situated express stores saw sales jump 10.2%.

Coles said that outside of Victoria sales growth in other states was on average elevated but eased off in the latter part of the quarter – a pointer to a tougher December quarter perhaps?

In addition to this, the pattern of bigger basket sizes (for each transaction) continued across the country, which is more than offsetting fewer transactions.

Coles said that customers continue to focus on home cooking and hygiene. Key growth categories included baking mixes, herbs and spices and flour, cleaning goods, and dishwashing.

Not so favoured were infant formula, facial tissues, and beauty where sales fell.

Coles’ CEO Steven Cain said the company was continuing to build on its digital and online offerings despite “significant” COVID restrictions in Victoria.

“As we enter a new COVID normal, Coles will continue to prioritise the health and safety of our customers and team members throughout our store network and supply chain,” he said.

“I would like to thank our team, our suppliers, our community partners, the state and federal governments, and of course our customers for helping us to navigate our collective way through the first and second waves of COVID.”

“We have been proud to serve as an essential needs business during this, the greatest test of our lifetime, and look forward to proudly serving and contributing as Australia begins its recovery and growth phase,” he said.

But Coles did provide reason for a note of caution – In the first four weeks of the current December quarter, supermarkets comparable sales growth was 6.4% (5.4% excluding Victoria). Online sales growth for the first four weeks of the second quarter was 45%, as demand eased in Victoria.

Liquor comparable sales growth for the first four weeks of the second quarter was still high though at 16.9% (15.3% excluding Victoria).

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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