Coles shares sink on soft 2H trading update
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The news: Supermarket group Coles led losses on the ASX 200 in early trade after reporting a weaker-than-expected trading update on second-half year-to-date sales.
Coles shares were down 7.8% to $20.46 at 10:45am AEDT. The stock is now roughly flat over the last 12 months.
Jarden analyst Ben Gilbert called it a “good result”, with the first-half operating numbers “broadly in line” with expectations and liquor sales “better than feared”.
However, Gilbert said the second-half trading update was softer than expectations, and weaker than Woolworths’ update earlier this week.
He believes despite the “net solid result”, the stock is likely to trade lower and may see “modest negative consensus revisions”.
Coles sees 11.3% slide in 1H profit, hikes dividend
The news: Supermarket giant Coles reported an 11.3% drop in first-half net profit to $511 million, as chief executive Leah Weckert warned of a “highly competitive operating environment”.
The numbers: The result fell short of market estimates of $674.5 million, according to Visible Alpha data.
Sales revenue rose 2.5% year on year to $23.6 billion. Supermarkets sales revenue increased 3.6% while liquor sales revenue fell 3.2%.
The group declared an interim dividend of 41 cents per share, in line with estimates and up from the 37 cents per share in the prior corresponding period.
The context: Weckert said supermarket sales increased by 3.7% year on year during the first seven weeks of the third quarter, as the company continues to cycle impacts from competitor industrial action last year.
The softening in liquor sales moderated to a 2.5% decline during the same seven-week period, as the group flagged a one-off cost of $7 million during the second half as it simplifies its Liquorland Warehouse operations.
Weckert noted that customers remain value oriented and are “responding well” to Coles’ expanded range of everyday value products and loyalty offers.
What they said: “We expect the market to remain highly competitive and our focus is on ensuring we deliver a seamless omnichannel experience with the right range, quality, value and innovation to drive continued sales momentum at the same time as consistently delivering more efficient and streamlined operations,” said Weckert.
The source: ASX
