‘Margin pressure’ hinders Coles Liquor result

06 February, 2020 by Deborah Jackson

Coles Group has released a trading update ahead of its official 2020 half yearly results, and despite achieving better than expected Christmas trade in its supermarket division, earnings in the Liquor division are expected to be down.

A statement provided by the ASX-listed company says that earnings before interest and tax (EBIT) in liquor had been impacted by the “commencement of strategic range reviews”.

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Thanks to Christmas trade, the supermarket division delivered comparable sales growth of 3.6 per cent in the second quarter and 2.0 per cent in the first half. Whereas in liquor, there was growth of 2.1 per cent for the second quarter and 2.9 per cent for the first half.

The statement said: “Despite reporting a satisfactory outcome on sales, Liquor earnings before interest and tax (EBIT) in the first half of FY20 was down on the prior corresponding period as a result of margin pressure and was impacted by clearance and promotional activity following the commencement of strategic range reviews.”

Overall, Coles’ provisional first half FY20 Group EBIT is expected to be between $710 million and $730 million.

Further detail and trading outlook will be provided in Coles’ official 2020 half yearly results announcement on 18 February.