Source : THE AGE NEWS
Coles is watching closely for any flow-on effects from US President Donald Trump’s global tariffs that could threaten the supermarket’s improving sales, deflation, and dent consumer sentiment, which has started looking up.
Chief executive Leah Weckert said the direct impact of Trump’s tariffs would likely be “very minimal” as the supermarket unveiled a 3.7 per cent sales lift over the three months between early January and the end of March.
Coles reported deflating prices in fresh produce.Credit: Eamon Gallagher
“What we are keeping an eye on, though, is, are there secondary effects or indirect impacts that could come through? I think it’s probably too early to really tell on that,” Weckert told reporters on Wednesday morning.
Processing fees around meat, particularly beef, is an area the supermarket is closely watching, she added.
Coles notched $9.4 billion in supermarket sales, aided by a 25.7 per cent growth in online sales to $1.1 billion. Liquor sales, which have previously been a weaker area for the supermarket amid competition from Dan Murphy’s and BWS, grew 3.4 per cent.
However, investors appear unimpressed with the result, sending Coles’ share price 1.3 per cent lower in late morning trading.
The supermarket reported falling prices in fresh produce, such as broccoli, cauliflower, cabbage, and tomatoes, as well as packaged goods like cereal, tea, healthcare products, dishwashing products, and cleaning products.
“We have seen a modest uptick in terms of how people are feeling, which is good, although I would say that some of the events from the US and around the tariffs are probably offsetting that,” Weckert said.
Coles’ Leah Weckert said Easter trade remained strong.
Credit: Arsineh Houspian
Coles added 138 new own-brand products to its range during the quarter as Australians continue to opt for private-label goods. Sales from the Coles Finest range grew 13.7 per cent. The supermarket’s frozen range is a strong growth area.
Easter trade was “still very strong”, Weckert said, although chocolate egg prices increased significantly as the price of cocoa skyrocketed. Prices for products containing cocoa and coffee are continuing to rise, she said.
“Cocoa, for example … has increased more than 180 per cent in the last 12 months. So that is something that suppliers have been very proactive in passing on, and is one of the reasons that we saw Easter eggs more expensive.”
Weckert confirmed that Coles was looking at steeper promotions on a narrower range of items, rather than shallow promotions on a bigger range.
Australia’s second-largest supermarket was also able to pick up customers from the fallout of Woolworths’ workers strike, which inflicted a $190 million blow on its half-year profits.
“We have been pleased with what we’ve seen in terms of stickiness … of new customers that we gained,” she said.
Coles also had to contend with disruptions in Queensland and northern NSW due to Cyclone Alfred, which ultimately led to a minor sales uptick driven by panic buying before stores were temporarily shut.
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