Coles on alert for Trump tariff fallout as supermarket prices cool

Coles is watching closely for flow-on effects from US President Donald Trump’s global tariffs that could threaten the supermarket’s improving sales and dent consumer sentiment, which has started improving.

Chief executive Leah Weckert said the direct impact of Trump’s tariffs would probably be “very minimal” as the supermarket unveiled a 3.7 per cent sales lift over the three months from early January.

Coles reported deflating prices in fresh produce.Credit: Eamon Gallagher

“Are there secondary effects or indirect impacts that could come through? I think it’s probably too early to really tell on that,” Weckert said on Wednesday morning.

Processing fees around meat, particularly beef, is an area the supermarket is closely watching, she added.

Coles notched $9.4 billion in supermarket sales, aided by 25.7 per cent growth in online sales to $1.1 billion. Liquor sales, which had previously been a weaker area for the supermarket amid competition from Dan Murphy’s and BWS, grew 3.4 per cent.

However, investors appear unimpressed, sending Coles’ share price 1 per cent lower on Wednesday.

The supermarket chain reported falling prices in fresh produce such as broccoli, cauliflower, cabbage and tomatoes as well as packaged goods such as cereal, tea, healthcare products, dishwashing products and cleaning products.

“We have seen a modest uptick in terms of how people are feeling, which is good, although I would say that some of the events from the US and around the tariffs are probably offsetting that,” Weckert said.

Coles added 138 new own-brand products to its range during the quarter as Australians continue to opt for private-label goods. Sales from the Coles Finest range grew 13.7 per cent. The supermarket’s frozen range is a strong growth area.

Coles’ Leah Weckert said Easter trade remained strong. Credit: Arsineh Houspian

Easter trade was “still very strong”, Weckert said, although chocolate egg prices increased significantly as the price of cocoa skyrocketed. Prices for products containing cocoa and coffee are continuing to rise, she said.

“Cocoa, for example … has increased more than 180 per cent in the last 12 months. So that is something that suppliers have been very proactive in passing on, and is one of the reasons that we saw Easter eggs more expensive.”

Weckert confirmed that Coles was looking at steeper promotions on a narrower range of items, rather than shallow promotions on a bigger range.

Australia’s second-largest supermarket was also able to pick up customers from the fallout of Woolworths’ workers strike, which inflicted a $190 million blow on the rival’s half-year profits.

“We have been pleased with what we’ve seen in terms of stickiness … of new customers that we gained,” she said.

Coles also had to contend with disruptions in Queensland and northern NSW due to Cyclone Alfred, which led to a minor sales uptick driven by panic-buying before stores were temporarily shut.

The Australian Competition & Consumer Commission’s year-long inquiry into the supermarket sector found in February that Woolworths and Coles enjoyed an “entrenched position in an oligopolistic market” that was set to continue in the foreseeable future.

Part of Prime Minister Anthony Albanese’s federal election pitch has been to declare he would “ban price gouging” by the supermarkets if re-elected.

Weckert said it was great to have several supermarket inquiries and hearings now completed.

“After 12 months and a very intensive look at all of our data, they didn’t find any evidence of price gouging, and they didn’t find any evidence of land banking,” she said.

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