Coles Liquor committed to higher margin strategy

15 February, 2013 by

By James Atkinson

Coles Liquor's half-yearly sales growth was constrained by a decline in low margin bulk beer sales after the company last year introduced case limits to block secondary wholesaling through its liquor stores.

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But parent company Wesfarmers yesterday announced that Coles Liquor had improved its performance in the six months to December 31 due to strong sales growth in higher margin categories, particularly wine, and a growing contribution from exclusive lines.  

"Consistent with the business' focus on promotional effectiveness, a decline in low margin bulk beer sales was a notable drag on sales growth throughout the half, but excluding this impact, underlying sales momentum was pleasing," the company said.

"Better pricing architecture, more effective marketing and improvements in direct and online channels were all positive contributors to an improving sales trend."

Wesfarmers said good progress was made on the restructure of Coles' liquor network during the half with the opening of 26 liquor stores, which included six 1st Choice stores, and the closure of 15 underperforming liquor stores.  

Coles' operating revenue for the half-year was up 4.8 per cent to $18.0 billion, with earnings before interest and tax (EBIT) up 15.1 per cent to $755 million. 

Food and liquor sales growth for the half year was 5.0 per cent with comparable store sales growth of 3.8 per cent.