Australian supermarket operator Coles (ASX:COL) has reported a 4.8% rise in its full-year cash profit, amounting to $1.1 billion, driven by a solid surge in revenue from its grocery division.
While revenue from liquor sales experienced a slight decline, Coles, the country's second-largest supermarket chain, achieved $36.75 billion in revenue from its groceries segment, marking an impressive increase of over 6%. The total revenue, inclusive of liquor, grew by 5.2%, reaching $41.83 billion, although these figures lag behind the inflation rate.
The results for the full fiscal year indicate a slowdown in the second half following Coles' robust first-half earnings. The net profit after tax surged by 17.1% to $643 million during the first half.
Amid these figures, it's important to note that the Australian Bureau of Statistics' consumer price data for the year to June demonstrated a 6% rise in the Consumer Price Index (CPI), juxtaposed with a 7.5% increase in the cost of "food and non-alcoholic beverages." This 7.5% rise, though still substantial, represents a decline from the peak of 9.2% observed in the December quarter.
The price surge was particularly notable in dairy products, with an increase of over 15%, closely followed by bread and cereals, up nearly 12%. Processed foods like coffee and tea also experienced a more than 11% increase.
The indicator of key retailing profit, Earnings Before Interest and Taxes (EBIT), rose by 4.5%, surpassing $1.9 billion.
Coles has declared a final dividend of 36 cents per share, up from 33 cents in the previous year, contributing to a full-year shareholder payout of 66 cents per share, as compared to 63 cents in the 2021-22 period.
This year's annual results mark the debut of the new CEO, Leah Weckert, who assumed leadership earlier this year, succeeding Steve Cain.
Weckert noted a shift in consumer behavior, as people began to consider takeaway meals for special occasions, with supermarkets playing an integral role in helping them make the most of their budgets. Supermarket chains have been able to pass on the impact of higher prices to consumers, particularly given the inflationary environment, leading to an increase in home-cooked meals.
Coles attributed its strong supermarket sales to its value product range and strategic campaigns around significant events like Easter, Christmas, and Mother's Day.
Woolworths, Australia's largest supermarket retailer, is set to announce its financial results for the 2023 fiscal year on Wednesday.
