Coles profit falls 13.5 per cent to $1.6 billion

COLES has reported a 13.5 per cent decline in full-year profit to $1.61 billion, with comparable food and liquor sales slowing to just one per cent.

Coles’ sales growth has slowed to just one per cent. Picture: William West/AFP

COLES has reported a 13.5 per cent decline in full-year profit to $1.61 billion, with comparable food and liquor sales slowing to just one per cent.

The nation’s second-largest supermarket has struggled to maintain momentum in the face of a resurgent Woolworths and fierce price competition from German discounter Aldi.

Earnings for parent company Wesfarmers increased 22.1 per cent to $2.87 billion, while home improvement giant Bunnings eked out profit growth of 2.6 per cent to $1.25 billion.

The department stores division nearly doubled its profit to $543 million off the back of another strong year for Kmart, and improved performance of Target which stemmed its losses to $10 million, following a loss of $195 million in 2016. Officeworks increased its profit by 7.5 per cent to $144 million.

Wesfarmers will pay a final, fully franked dividend of $1.20 per share, bringing the total full-year payout to $2.23 per share, an increase of 19.9 per cent on the 2016 financial year.

Coles comparable food and liquor sales growth fell one per cent, compared with 4.1 per cent in the previous year, while revenue was largely flat.

“In a very competitive environment, Coles invested in value, service, and better quality and availability in Fresh, to deliver continued growth in sales,” Wesfarmers chief executive Richard Goyder said in a statement.

“Coles continued to execute its customer-led strategy, which it expects will provide a platform for sustainable growth in earnings and return on capital over the long term.

“The Coles Liquor transformation was progressed through investments in price, range and the quality of the store network, with the business achieving its second consecutive year of positive sales growth. The Convenience business reported lower revenue due to lower fuel volumes while store sales continued to grow.”

Mr Goyder said there remained “considerable work to complete the transformation” of Target, with “decisive steps” taken during the year to lower prices, exit unprofitable categories and improve merchandising and sourcing.

Woolworths is due to report its full-year results next Wednesday, August 23.

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