Coles made mistakes but has improved, chairman tells AGM

WESFARMERS chairman Bob Every has attempted to soothe shareholder concerns over allegations of unconscionable conduct.

Bob Every and Richard Goyder at the Wesfarmers AGM in Perth. Picture: Colin Murty

WESFARMERS chairman Bob Every has attempted to soothe shareholder concerns over allegations of unconscionable conduct against supermarket giant Coles, admitting the company had made “mistakes in the past” but any problems had been largely ­addressed.

Speaking at the conglomerate’s annual meeting in Perth, Mr Every said he could not comment in detail on the most recent claims levelled against its Coles subsidiary by the Australian Competition and Consumer Commission.

But he strongly defended the group’s practices and its dealings with suppliers.

“The ACCC commenced its investigation in June 2012 and the board has had strong oversight of the matter since it began and continues to monitor it closely,” Mr Every said.

“There is no doubt Coles has made some mistakes in the past. Since the investigation started Coles has taken many steps to seek to avoid similar problems in the future.”

Mr Every said the steps included strengthening its codes of conduct, training its buyers on competition laws, developing an internal supplier charter and negotiating with the Australian Food and Grocery Council on a grocery industry code of conduct.

Coles had also established an informal dispute resolution process for suppliers that was administered by former Victorian premier Jeff Kennett.

“We believe Coles’ current relationships with its suppliers are now much improved and generally very good,” Mr Every said.

The ACCC allegations last month include that Coles demanded payment it either knew or ought to have known it had no right to, applying undue pressure and commercial threats. The watchdog has also previously targeted issues such as Coles’ fuel discounts program and misleading descriptions of its bread.

Earlier, the ACCC had some good news for Wesfarmers, announcing it had approved the group’s $180 million takeover of Pacific Brands’ workwear division, which includes Hard Yakka, King Gee and Stubbies.

The ACCC said in a statement that Wesfarmers would still have to compete with other retail chains for the supply of workwear.

“New wholesalers and resellers have entered the market in recent years and the ACCC expects that this trend will continue,” ACCC chairman Rod Sims said. “Industry feedback suggests that brand loyalty has diminished over recent years as customers become more focused on quality, price and service.”

Wesfarmers CEO Richard Goyder told shareholders at the annual meeting that Coles had made a strong start to the 2015 financial year, supported by investments that had resulted in improvements in sales density, transactions, basket size and fresh participation.

“Coles will continue to look for opportunities to drive value for Australian consumers through lower prices and increasingly targeted offers through its Flybuys program,” Mr Goyder said. “We are doing a lot of work to improve the Coles liquor businesses.”