Coles Q1 2021 sales up 9.7pc

Cooking, cleaning and a huge lift in online put a rocket under first quarter sales, Coles has reported.

Coles says the rapid sales growth of 2021’s first quarter started to moderate early in the second quarter. Picture: Toby Zerna

Coles chief executive Steven Cain believes Australia will likely suffer from protracted high unemployment for some time, despite the Reserve Bank declaring this week the nation was technically out of a recession, with the supermarket business proving resilient in good and bad economic times.

Coles chief executive Steven Cain believes Australia is likely to suffer from protracted high unemployment for some time, despite the Reserve Bank declaring this week the nation was technically out of a recession, with the supermarket business proving resilient in good and bad economic times.

That resilience would be on show at Christmas, which Mr Cain tipped would be one of the biggest parties Australia had seen due to more people being stuck at home and celebrating with family and friends over multiple occasions.

“It is going to be not one big one on one day but many held throughout December and January, with lots of small gatherings,’’ Mr Cain said after Coles on Wednesday posted first-quarter sales growth of 9.7 per cent.

Marking the second-highest quarterly comparable sales growth since the Wesfarmers takeover of Coles in 2007, the sales leap in the first quarter of the 2021 fiscal year was driven by strong consumer focus on home cooking and hygiene, especially in Victoria as the state limped through a lengthy lockdown. Stronger liquor sales also filled Coles’s cash registers, while online was again a feature of the supermarket group’s performance, up 57 per cent.

Mr Cain sees much of that momentum continuing into Christmas, as the tougher economic conditions draw shoppers to its low prices, but with many also trading up when visiting his stores.

“People trade up, so I think this year, when people do visit other people’s houses, they might be taking a better bottle of wine than they normally would, or they might be taking a bunch of flowers,” Mr Cain said.

He said Coles could be resilient in difficult economic times and he expected unemployment to continue to be a feature of the economy.

“When we demerged from Wesfarmers we said one of the great things about Coles is it is a resilient business in good times and bad times and I think that has demonstrated to be the case,” he said. “We are less dependent on the economy than most and I think even as the economy gets better everyone still has to focus on what’s happening underneath that. It is still clear there is going to be a large number of unemployed people for an extended period.”

Mr Cain said Coles was already benefiting from the estimated $60bn sloshing around the economy as money once spent on overseas holidays stayed inside Australia’s borders.

Releasing its first-quarter performance, Coles revealed the strength of demand for core groceries, especially items to help home cleaning and home cooking.

In the first quarter, the supermarkets’ comparable sales growth was driven by Victoria, and to a lesser extent NSW, as stage-three and subsequently stage-four restrictions were introduced.

Coles said same-store sales growth, excluding Victoria, was 7.7 per cent. Sales growth in other states were on average elevated, but tapered off in the latter part of the quarter. The pattern of bigger basket sizes continued across the country, more than offsetting lower transactions.

Coles said total revenue for the first quarter of 2021 rose 10.5 per cent to $9.6bn. Liquor’s comparable sales growth was 17.8 per cent to $852m and online sales growth was 80 per cent.

Coles shares rose 47c, or 2.7 per cent, to $17.68.