Supermarket Giant Reports $22.2 Billion Sales Revenue, Minor Profit Fall

Coles shares rose nearly 8 percent in early morning trade, before pulling back slightly.

General view inside the new Automated Distribution Centre at Coles Redbank in Brisbane, Australia, on April 27, 2023. Chris Hyde/Getty Images for Coles

Australian supermarket giant Coles has reported a $594 million (US$388 million) net profit after tax in the first half of the 2024 financial year, 3.6 percent less than the first half of 2023.

However, the company reported a nearly 7 percent boost in sales revenue (pdf) to $22.2 billion in the first half of 2024, up from $20.8 billion in the prior corresponding half.

Coles also provided an insight into the first eight weeks of the third quarter, noting supermarket sales revenue has already grown 4.9 percent.

Shareholders appear to have responded positively to the results, with the company’s share price up 5.67 percent to $16.78 at the time of writing. In earlier trade, Coles shares soared nearly 8 percent to $17.13.

The company reported a group earnings before interest, taxes, depreciation and amortisation (EBITDA), another key measure of profitability, of $1.854 billion, up 2.5 percent on half one 2023. Underlying EBITDA rose 4.1 percent to $1.9 billion.

Supermarket group sales revenue rose 4.9 percent to $19.8 billion, while liquor revenue jumped 1.8 percent to $1.99 billion.

Management Pleased With Results

Commenting on the results, Coles chairman James Graham said it was pleasing to deliver a net profit after tax of $594 million considering the “significant cost pressures within the business.”

“During the half year, we remained focused on delivering for all of our stakeholders. We are committed to continuing to invest in value for Australian households, supporting our suppliers and communities and delivering returns to our shareholders,” he said.

Chief Executive Officer Leah Weckert expressed sympathy for customers facing cost of living pressures, noting the company has reduced costs of hundreds of products.

“We understand the cost of living pressures that many of our customers face, such as higher rent, mortgage, energy, and other household bills. That’s why we are working hard to deliver value to our customers every day,” she said.

“Over the last six months, we lowered the prices of hundreds of products through our ‘Great Value, Hands Down’ campaign and we delivered additional value through a wide range of Exclusive to Coles products, weekly specials, and our Flybuys loyalty program. We know that price matters to our customers, especially during the festive season.”

Coles Insight Into Australian Economic Landscape

Looking to the future, Coles said Australia has the “highest population growth of developed and undeveloped countries.”

In a table from a 2023 government report, the company highlighted Australia’s population is expected to grow by 1.2 percent by 2030, compared to 0.4 percent in the United States, 0.2 percent in the United Kingdom, 0.6 percent in Canada, and 0.5 percent in Indonesia.

Coles said they are expecting a shift to in-home dining due to pressure on discretionary spending. Further, they presented table from an Australia Bureau of Statistics report showing food inflation in Australia over the past few years was lower than other developed countries.

For example, it showed food Consumer Price Index (CPI) growth of 18.8 percent between 2019 and 2023, compared to 29.5 percent in the UK, 25.4 percent in the U.S., 26.2 percent in Europe, 23 percent in Canada, and 24.9 percent in New Zealand.

Supermarket Snapshot

In a presentation (pdf) to the market, Coles revealed it has 850 supermarkets in every part of Australia, 8,000 suppliers and 40,000 product lines. The supermarket is one of the biggest private sector employees in Australia, with 120,000 team members.

The supermarket said it has passed on a 5.75 percent wage increase to 97,000 supermarket wage employees, along with an 0.5 percent superannuation increase.

The company has more than 440,000 direct shareholders, along with millions of indirect shareholders including via superannuation funds.

Shareholders will receive a dividend of 36 cents for each share in the first half of the 2024 financial year, the company declared.

Coles reported a 29.2 percent revenue growth via digital channels compared to the first half of 20223, while liquor digital revenue rose 14.9 percent.

Engagement in Flybuys was also at a record level, with Coles reporting a 9.5 percent increase in membership and 818,000 new active members.

Coles introduced smart gates in 267 stores, while “skip scan” was rolled out in 305 shops.

What’s Ahead?

Coles revealed it has had a positive start to the second half of the 2024 financial year, with sales revenue rising amid “volume growth.”

Fresh produce and meat was deflating, while packaged inflation was moderating, according to the supermarket.

However, Coles conceded underlying cost inflation continues and the company will look to counteract this via a simplify and save invest program.

Liquor sales fell in the first eight weeks of the third quarter of 2024, amid less discretionary spending from customers amid cost of living pressures.

Coles said providing value for customers will be a major focus for Coles into the future.

Commenting on this outlook, Ms. Weckert said, “This is an exciting period for Coles with key milestones in our major infrastructure projects to be delivered within the next 12 months.”

“These projects, along with the investments we are making in our digital assets and our stores, will improve efficiency and help to create a differentiated service offering for our customers, establishing the foundations for long term sustainable growth.”