Coles shares rise after beating profit estimates
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More news: Coles shares climbed on the ASX after the supermarket group beat full-year profit estimates.
Shares were up 2.1% to $18.90 by 11:50am AEST, having rallied 9% since the start of July.
Jarden analysts said the "good result" was driven by controlled costs and better-than-expected margins. They noted that while liquor "remains a challenge", the analysts expect to see consensus forecasts lift into FY25.
However, E&P Capital retail analyst Phillip Kimber flagged that a softer start to FY25 and higher transformation costs may lead to "minor downgrades" to consensus estimates in FY25.
What they said: "[Coles] delivered an inline FY24 result, however sales momentum in the key supermarket business has moderated more than expected," Kimber said.
"Weighing these factors up, we expect [Coles]’s shares to drift down following the FY24 result."
Coles beats profit estimates despite 'challenging' year
The news: Supermarket major Coles lifted its full-year profit and total dividend, beating average forecasts for the 2024 financial year.
The numbers: Coles reported net profit after tax of $1.12 billion, up 1.8% from $1.10 billion in FY23, after analysts had expected a fall to $1.07 billion. Total group EBITDA rose 3.3% to $3.65 billion as sales revenue jumped 5.1% to $43.57 billion.
The company declared a final dividend of 32 cents per share, beating consensus forecasts of 31 cents, taking the total dividend to 68 cents, up 3% on last year.
Coles said it expects to open around eight new stores, close five stores and renew approximately 50 stores in FY25.
The context: The supermarket group said that growth of 2.3% in liquor sales was impacted by a "challenging liquor market", as customers reduced their discretionary spending due to economic pressures, coupled with the business transitioning away from less profitable bulk sales and adjusting promotional mix across third party eCommerce channels throughout the year.
eCommerce sales revenue increased 9.2% year on year as digital platforms delivered growth underpinned by on-demand delivery which was expanded to include Menulog in over 400 stores, in addition to DoorDash and Uber Eats, already in more than 600 stores.
What they said: "The financial pressures on households and families have been front of mind for us this year and we have endeavoured to deliver value across our supermarket, liquor and online offerings to help customers balance the household budget," said Coles group CEO Leah Weckert.
"At the same time, we have worked hard to deliver improvements in availability and quality, made significant inroads in addressing loss, accelerated our digital offering, continued to maintain a strong focus on costs and completed the construction of our second [automated distribution centre] and both our [customer fulfilment centres]," she said.
The sources: ASX announcement, E&P Capital research, Jarden research
