Coles has reported a slowdown in market growth in the first quarter of its 2017 financial year.

Coles parent company, Wesfarmers, this week released its first quarter 2017 financial year results showing Coles food and liquor sales increased by only 2.9 per cent in the quarter, reaching AUD $7.9 billion. In the first quarter of Wesfarmers 2016 financial year, food and liquor sales increased by 3.5 per cent.

Managing Director of Coles, John Durkan, described the comparable sales growth achieved in the quarter as satisfactory.

“In our food business, we have 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. Despite these changes in market conditions, our focus on the customer will not waver,” Durkan stated.

Liquor turnaround

The Coles liquor transformation continues with Wesfarmers reporting that its liquor business achieved its fourth consecutive quarter of growth in comparable store sales.

“It is pleasing to see the business maintain the positive sales momentum that was established in the prior year as we continue to progress our transformation strategy,” Durkan said.

Convenience sales drop

Total Coles Express sales, including fuel, were AUD $1.5 billion for the quarter, a decrease of 13.7 per cent on the prior corresponding quarter.

Wesfarmers attributed the drop in sales was due to lower fuel volumes and prices.

Despite the fall in petrol sales, headline convenience store sales increase by 7.4 per cent. Wesfarmers said these sales were driven by improvements made to its ‘food-to-go’ offerings and the extension of Every Day value.

Target troubles

Reflecting on the results of other Wesfarmers divisions, Wesfarmers Managing Director, Richard Goyder, said its Target stores experienced a challenging quarter.

“Target experienced a challenging quarter, with the accelerated conversion to everyday low pricing and the decision to cease the Toy Sale contributing to a 17.1 per cent decline in sales,” Goyder said.

Despite the ongoing closing down sales from its competitor Masters, Wesfarmers’ Bunnings Australia and New Zealand hardware stores experienced a total sales growth of 7.4 per cent during the quarter.

“In the United Kingdom and Ireland, good progress continues to be made to reshape the business, with sales of £320 (AUD $554 million) for the quarter, in line with expectations,” Goyder said about the progress of the international Homebase hardware stores it acquired in January 2016.

 

Related articles

·         Wesfarmers 2016 profit drop but Coles remains strong

·         Wesfarmers tests the waters with new Coles Liquor concept store

·         Wesfarmers acquisition of Homebase complete

·         Coles returns top profits for Wesfarmers, latest results

·         Wesfarmers introduces liquor home delivery

·         Simplot enters 8 yr deal with Coles on frozen veg