Coles is still lagging behind Woolworths when it comes to sales growth

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The latest quarterly sales numbers from Coles show the Wesfarmers-owned supermarket chain is still lagging behind those of main competitor Woolworths.

Headline food and liquor sales for the first quarter were $7.97 billion, up 1.5% on the same three months last year.

However, comparable food and liquor sales increased just 0.4% and comparable food sales were up 0.3% for the quarter.

Woolworths, in its 2017 results, reported a 4.5% rise Australian food sales to $36.37 billion over the year with the fourth quarter the strongest at 7.2%. Comparable sales increased by 3.6% for the 12 months.

The trend in prices continues to be down. Wesfarmers says food and liquor price deflation was 2.3% during the quarter. Average prices at Woolworths fell by 2.1% last financial year.

At midday, Wesfarmers shares were down 2% to $41.85.

Wesfarmers managing director Richard Goyder singled out the “strong performances” from hardware chain Bunnings, Kmart and Officeworks.

Here are the first quarter 2018 results across the divisions:

Source: Wesfarmers

For Coles, Goyder says the business continued to invest across all elements of the customer offer.

“Sales growth was achieved despite significant fresh produce deflation during the period, and the business continued to see improvements in key metrics such as transaction growth, unit growth, fresh participation and customer satisfaction,” says Goyder.

Coles managing director John Durkan sales for the first quarter were broadly in line with the trend in the 2017 financial year.

“As we outlined at our full year update in August, we continue to proactively invest in value, quality, availability and service for our customers,” he says.

“This underpinned continued improvements in transaction growth, unit growth and customer satisfaction in the quarter.

“There are still many opportunities for growth in the business. We continue to focus on increasing our penetration in Fresh, improving our store network, investing in new routes to market, and simplifying our business in terms of range and our cost of doing business.”

Coles opened one supermarket and closed four during the quarter. Coles now has a total of 798 supermarkets.

Bunnings Australia and New Zealand sales grew 11.5% to $2.96 billion during the quarter. Kmart’s sales were up 9% to $1.36 billion and Officeworks 7.8% to $497 million.

Target’s total sales fell 6.4% to $602 million. Department Stores chief executive Guy Russo says the performance reflects the continued reset of product, price and range, particularly across womenswear, toys and general merchandise.

Total sales for Bunnings UK and Ireland fell 13.8% to £276 million ($457 million).

Wesfarmers says the early trading performance of the first eight Bunnings Warehouse pilots is encouraging.

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