Coles feels the pinch
SUPERMARKET giant Coles has suffered a slowdown in first-quarter sales growth as a rapid fall in the price of fresh produce and competition from a resurgent Woolworths keeps pressure on margins.
The Wesfarmers-owned retailer’s comparable food and liquor sales grew only 0.4 per cent in the 13 weeks to September 24, markedly weaker than the 1.8 per cent lift in the same period year ago.
Wesfarmers says a 2.3 per cent fall in food and liquor prices in the first quarter weighed on sales growth, with bumper supplies of fruit and vegetables keeping produce prices down.
Coles managing director John Durkan said excluding fresh produce, food and liquor comparable sales were broadly in line with the trend achieved in the 2017 financial year.
Convenience store comparable sales growth was also weaker at 0.2 per cent, dragged down by a 21 per cent fall in fuel volumes.
Wesfarmers managing director Richard Goyder said the sales performance was “generally pleasing” and noted continued strong performance from the Bunnings Australia and New Zealand, Kmart and Officeworks chains.
Sales growth in consumer and commercial markets helped Bunnings Australia and New Zealand lift store-onstore sales by 10.8 per cent, up from 5.5 per cent a year ago.
Target’s comparable sales fell 6.4 per cent — an improvement on the 21.9 per cent fall recorded in the first quarter of 2016-17.
Kmart’s comparable sales grew 4.9 per cent for the quarter — lower than 8.2 per cent a year ago.
Officeworks’ sales grew 7.8 per cent to $497 million with increases in instore and online transactions.
Bunnings United Kingdom and Ireland’s total sales decreased 17.5 per cent with the company blaming tough trading conditions in its new territories. It said it believed sales would soon improve.
Eight Bunnings Warehouse pilot stores were opened in the UK and Ireland during the quarter.
Shares in Wesfarmers were down 96 cents, or 2.3 per cent, to $41.77. AAP