Coles chief Steven Cain hopes to raise a glass to Christmas growth

Coles chief Steven Cain is confident a new collectable campaign around wine glasses will bolster the retailer’s run into Christmas.

Coles chief executive Steven Cain isn’t seeing the billions of dollars freed up by the recent cuts to interest rates and tax flooding into his supermarket cash registers just yet, but is confident a new collectable campaign around wine glasses and its focus on convenience and value will bolster the retailer’s run into Christmas.

Any Coles run into the key trading period will come off its slowest same-store sales growth in 12 years, since it was purchased by Wesfarmers, with the retailer on Tuesday reporting first-quarter comparable sales growth of 0.1 per cent.

Coles said supermarkets reported total first-quarter sales growth of 1.6 per cent to $7.705bn. The consensus expectation was for sales to fall by 0.5 per cent.

Coles reported a 0.7 per cent uptick in liquor sales and a 0.4 per cent boost to Coles Express sales. It was the first quarter of positive comparable fuel volume growth in four years.

The slimmest like-for-like sales growth at its supermarkets was hampered by the fact Coles was experiencing one of its strongest growth spurts ever last year, when the launch of its Little Shop collectables campaign pushed sales above 5 per cent. Price inflation for the quarter of 1.4 per cent was in line with the fourth quarter of the 2019 fiscal year.

The better-than-expected sales lift for the quarter instilled new confidence in investors, with Coles shares climbing more than 3 per cent on Tuesday before closing up 2.78 per cent, or 40.5c, at $14.965.

Mr Cain said Little Shop 2, held in the just-completed quarter, was successful but it came up against a strong collectables campaign from rival Woolworths.

“I think we would regard it as a success because all the metrics we look at were positive, also the competitor campaigns in the marketplace as well, so (it’s) always difficult to be exact on the success of things, but we were pleased with Little Shop 2,’’ Mr Cain said.

Coles has launched a new collectables campaign starting on Wednesday, timed for the peak entertaining season, which rewards customers with Spiegelau crystal glassware.

Mr Cain has maintained that at one point these collectables campaigns will run out of steam, and popularity, and end, but he would not commit to an end to the promotion strategy just yet.

“We have said previously that there will be the end to collectables — but it is too early to call when that will be,” he said.

Despite the flat result, Mr Cain was hopeful that recent tax cuts and reductions in official interest rates — the bulk of which were felt by people’s bank accounts in the first quarter — would eventually find their way into consumer spending. “We would expect tax and ­interest rate cuts to eventually flow through into some sort of ­expenditure, and what we have ­always said about Coles is that it is a resilient business and food is not a discretionary item,” he said.

“What we have noticed in stores is that value products are ­increasing in sales at the same time convenience products are increasing in sales and seeing more people shopping with Uber Eats, and also seeing a race to value. I am feeling confident about our plan. I think we have a very good plan heading into Christmas.’’

Coles Online sales revenue increased by 23.5 per cent in the first quarter, following the strong growth from the corresponding period a year before, and increased competitor activity. Shoppers were also increasingly turning to Coles’s private label offerings, with own brand sales growing by 4.7 per cent in the first quarter.

Coles chief executive Stephen Cain Picture: Wayne Taylor