Coles has reported a 2.2 per cent drop in net profit to $576 million for the six months ending 31 December, despite stronger sales during peak trading periods. The decline was mainly due to a 20 per cent fall in earnings from its struggling liquor division.
However, Coles increased its interim dividend to 37 cents per share, payable on 27 March. The company also announced that chairman James Graham will retire on 30 April, with Peter Allen set to take over.
The company faced $35 million in costs linked to the planned closure and restructuring of sites due to the development of a new automated distribution centre in Victoria. Despite these costs, reported earnings rose 10 per cent to $2.05 billion, exceeding market expectations. Supply chain disruptions at Woolworths also impacted Coles by $102 million.
Supermarket sales grew by 4.3 per cent to $20.63 billion, with private label groceries performing particularly well. The ‘Coles Finest’ range saw a 10.2 per cent increase in sales as customers focused on value and at-home entertaining. CEO Leah Weckert highlighted Coles’ efforts in maintaining affordability and quality, noting improvements in customer experience and cost savings of $157 million.
In contrast, liquor sales inched up by 0.8 per cent to $2 billion, but earnings dropped 20 per cent to $67 million, with margins shrinking to 3.3 per cent. Despite weaker discretionary spending, Coles reported a slight recovery in liquor sales in early Q3, with supermarket revenue rising by 3.4 per cent.
Looking forward, Coles continues investing in automation and cost-saving initiatives to enhance efficiency and customer experience while navigating ongoing economic pressures.
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