Coles’ sales slip back to pre-COVID normal

Coles has reported its first drop in quarterly sales in more than a decade as shopping levels return to normal after unusual panic buying ahead of lockdowns during the same period last year.

The supermarket giant’s boss has, however, welcomed the return to normality as more customers return to CBD shopping centres and frequent its stores more often.

The company reported a 5.1 per cent drop in third-quarter sales to $8.76 billion. On a like-for-like basis, sales were down 5.4 per cent from a year ago.

The bulk of the impact was felt in the grocery segment, with supermarket sales declining 6.1 per cent in the 12 weeks to March 28, to $7.72 billion.

The same period last year had seen double-digit sales growth as an impending lockdown due to COVID-19 triggered panic-buying by shoppers for items ranging from pasta to bread to toilet paper. Same-store sales for the third quarter last year rose 13.1 per cent.

However, the decline this year was offset by a a rise in liquor sales, up 2.6 per cent to $759 million, and a 7.4 per cent jump in Coles Express sales to $275 million.

Online food sales also grew by 49 per cent in the 12-week period.

Chief executive Steve Cain said trading was returning to more normal patterns as customers started to return to CBD stores and shopping centres.

“As people return to work, we’re seeing shopping centres much busier across the country, and that people are now shopping in the supermarkets as well as the other stores,” he said.

“What we’re also seeing for the first time in a year is increased shopping trips and transactions, which is supporting growth in our impulse categories like convenience foods, food to go, and so on.” 

Coles had lost market share in the first-half of the current financial year because its stores are more concentrated in metro areas compared to neighbourhood areas. It therefore expects to be a beneficiary of customers returning to the CBD. 

However, COVID safety measures including hand sanitisers and anti-bacterial wipes in stores, which cost the company around $10 million a month, are likely to remain until vaccination is rolled out across the country.

Analysts had widely expected Coles to report an 8-10 per cent fall in quarterly sales. Rival Woolworths, which will report third quarter numbers on Thursday, is also likely to report a drop in sales.

Meanwhile, trading was on the rise in the current quarter, Coles said.

In the first four weeks of the June quarter, supermarkets sales adjusted for ANZAC Day timing increased by about four per cent.

The increase was apparent partly on account of subdued sales in April last year, when social distancing restrictions had kicked in.

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