Coles announces progress in half year results
Coles has reported its half year results, with group sales revenue increasing by 8.1 per cent to $20.4bn, while liquor comparable sales grew by 15.1 per cent.
Liquor sales revenue was $1.9bn for the half year, an increase of 15.1 per cent on the prior corresponding period with comparable sales growth also growing by 15.1 per cent. Specifically in the second quarter, Liquor sales revenue increase by 13.4 per cent with comparable sales growth of 13.1 per cent, relative to the prior corresponding period.
This growth was driven by strong performance across all of the Coles Liquor banners, channels and categories, with e-commerce once again being a highlight and growing 90 per cent in the half. Larger format stores also helped drive growth, as did the spirits and RTD categories.
The results stated: “Consistent with the first quarter, Liquor maintained strong sales throughout the half however, these did taper off in
the second quarter as restrictions around the country eased.”
As was the case in the last quarter’s results announcement, Coles said progress has been made in line with its refreshed Liquor strategy, allowing it to be well positioned for growth opportunities throughout the quarter.
The results noted that: “Progress during the half was made under the ‘Simplify and refocus’ horizon of Liquor’s refreshed strategy including the implementation of a new customer focused organisational structure and simplifying the operating model with the roll out of simplified ticketing.
“An investment in service and team capability, particularly leading into the peak Christmas trading period, supported strong improvements in customer metrics and availability. An enhanced range was a strategic focus during the half with range changes implemented at Liquorland stores across key growth categories such as gin, rosé, craft beer and RTDs. Complementing the range activity, local product contribution continued to grow with 126 local lines launched during the half.
“Recent investments in systems, customer experience and capacity supported strong eCommerce sales growth of 90 per cent for the half. Three dark stores in Victoria, Queensland and Western Australia were opened to increase capacity, streamline order fulfilment and improve speed of delivery for customers. Enhancements were also made to the online shopping experience through greater website personalisation features.”
During the half, renewal activity was continued across all three of Coles Liquor’s banners, including the expansion of the new Liquorland trial concept to a multi-site trial that shows encouraging signs and positive customer response. First Choice Liquor Market conversions also continued with strong performance, as the format was rolled out to now 70 per cent of the First Choice network. Meanwhile, the Vintage Cellars trial concept store in Ashburton shows promising growth and the concept was rolled out to three more stores, with successful low-cost elements starting to be rolled out across the whole fleet.
“Optimisation of the Liquor store network continued during the half with 20 new stores opened and five stores closed,
taking the total network to 925 Liquor sites. Coles Liquor continues to maintain a focus on underperforming stores whilst developing a pipeline for future growth,” Coles said in the results.
The results also addressed the ongoing impact of COVID-19, noting that gross margin decreased by 34 bps to 21.5 per cent largely due to ongoing changes in mix because of the pandemic, and a trend of customers shifting towards larger pack sizes.
COVID-19 was also addressed by Coles Group CEO Steven Cain, speaking of the overall group’s performance. Cain said: ““We have now delivered the first 18 months of our refreshed strategy whilst ensuring that we support our team members, customers, suppliers and community partners through a volatile and unpredictable COVID-19 year. I would like to thank all our stakeholders for pulling together to make Australia one of the safest countries in the world.
“In the half we have made significant progress in our Own Brand product development, online operations and supply chain automation.
“Whilst COVID-19 will continue to present challenges it will also continue to present opportunities for change. With a strong balance sheet and team, Coles is well placed to continue delivering on our vision of becoming the most trusted retailer in Australia and grow long-term shareholder value.”