Coles Full Year Profit Down 13.5%

Australia’s largest supermarket, Coles, has been challenged by the stiff competition posed by Woolworths and German grocery retailer, Aldi.

Coles reported a 13.5 percent fall in full-year profit to $1.61 billion, with comparable food and liquor sales growth slowing by one percent, and revenue largely flat.

Analysts have expected this decline, as competitor Woolworths’ recent heavy investment in lowering prices has resulted in like-for-like food sales outperforming that of Coles. Woolworths have also ramped up its online offering this year, with its new e-commerce site unveiled two months ago.

“In a very competitive environment, sales and margin pressures in Coles are expected to persist,” said Wesfarmers in its full-year results.

“Within this environment, Coles will focus on plans to further enhance the quality of its fresh offer, and improve merchandising and availability, while continuing to drive operational efficiencies to support investments in value and service,” said Wesfarmers chief executive, Richard Goyder, in a statement.

Goyder said he expects that over the long term Coles will return to earnings growth.

Wesfarmers saw its department store division, however, nearly double its profit to $543 million, largely due to another strong year for Kmart, as well as improved results for Target, which cut its losses by $10 million, following a $195 million loss last year. Officeworks saw a 7.5 percent profit increase to $144 million.

Goyder said there was “considerable work to complete the transformation” of Target, with the company taking “decisive steps” during the year to lower prices, improve merchandising and sourcing and exit unprofitable lines.

Never miss our best stories. Sign up to Power Retail’s  free weekly newsletter and find our daily stories on FacebookTwitter and Instagram.

 

3 thoughts on “Coles Full Year Profit Down 13.5%

  1. The last sentence mentions unprofitable lines; are these lines unprofitable just for Target or have they been unprofitable for other retailers? I’m curious to know if there are lines that failing across the industry or it’s Target’s consumer base that aren’t buying them.

    Reply
    1. Hi Mark, the exit of “unprofitable lines” is specific to Target, according to Wesfarmers.

      Reply
    • Tesco Sainsbury Waitrose
    • 21st August

    Coles needs to sharpen their pencils considerably I think. Over the past 12 months, the gap between Woolworths (WW) and Coles on many lines in the $5 – $15 range is as much as $2 per item.
    Both WW and Coles have dropped a huge amount of product lines from their shelves in an effort to have better buying power on a smaller range, however the savings are not really passed on to consumers. Simply look at what’s left of our choice for instant coffee.
    For those that missed the price hikes, both WW and Coles increased their “mark up ” or margins from %75 – %150 mid 2012 to %200- %350 in 2016, then tapered back to %175- %275 in 2017.
    This is clearly evident when you see manufactures/distributors price lists with RRP and WW and Coles buy a pack of Arnotts biscuits for $1.25 per pack (RRP $2.49) and sell it for $3.65 per pack and even a humble jar of apple sauce bought for $0.56 per jar with RRP of $1.15 selling for $1.75.
    There will be more international supermarkets heading down under in the future and both Coles and WW need to lose the Gordon Gekko “Greed is good” idea of running a business or they will both fail dismally.

    Reply

Leave a Reply

Your email address will not be published. Required fields are marked *

PowerRetail Extra Enewsletter