Coles Experiences Decline in Profits Despite Increase in Sales

In a recent announcement, Coles’ CEO Leah Weckert has revealed exciting news for savvy shoppers on a budget. She predicts more discounts and special offers to come at Coles, as the company’s research indicates that many customers are feeling the pinch, especially with mortgage repayments.

Despite Coles Group reporting an 8.4% drop in net profit to $589 million in the latter half of 2023, down from $643 million the previous year, there’s been a 3.7% increase in group sales to $22.22 billion. This rise is attributed to smoother supply chains, discounts, and promotions.

Weckert notes a significant trend among customers who are actively seeking ways to cut down on their grocery expenses. They opt for cheaper brands, more affordable meat cuts, bulk purchases, and frozen items as they cook more meals at home.

Coles’ internal research highlights that mortgage payments have surpassed grocery bills as the top concern for many shoppers. However, they’re still eager for value, actively looking for specials and loyalty offers and using tools like catalogues and apps to manage costs.

Recognising the importance of providing value, Weckert emphasises Coles’ commitment to sharpening its offerings.

Addressing concerns about price hikes and supplier relations, Weckert assures that Australia’s food retail market remains competitive. She highlights the variety of supermarket options available to consumers, highlighting their choices.

While Coles has seen a moderation in price growth for certain items like fruits, vegetables, and meat, prices for milk and packaged products are keeping overall consumer prices elevated at 3%.

Investments in new automated distribution and customer fulfilment centres have impacted profitability, with group earnings before interest and tax (EBIT) falling by 5.1% to $1.06 billion. However, earnings in the supermarket segment rose slightly, while the liquor division saw a 5% increase.

Though supermarket margins dipped slightly to 5.1%, they still exceeded analysts’ expectations, contrasting with rival Woolworths’ reported margin of 6%.

In conclusion, Coles remains committed to providing value to its customers despite market challenges, and shoppers can expect further discounts and promotions as the company continues to adapt to changing consumer needs.

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