BENGALURU (Oct 30): Australia's Coles said on Friday that heightened promotional activity from competitors hurt early second-quarter sales as cost-conscious shoppers sought bargains, sending its shares to their steepest single-day decline in more than six years.
The country's second-largest supermarket chain said shoppers continued to compare prices across retailers and channels, while capitalising on promotions and loyalty programmes to manage stretched household budgets.
Coles' stock finished 7.7% lower at A$21.66, its weakest trade since late March 2020. It was one of the worst performers on the broader ASX 200 index, which closed up 0.2%. Coles shares fell as much as 12.8% in the day before recouping some losses.
The grocer flagged that supermarket sales growth slowed in the first four weeks of the second quarter, compared to a 3.6% rise in the first quarter, which ran from June 29 to Sept 27.
Coles said it was taking "deliberate actions to strengthen momentum", including relaunching its Every Day Price programme, which locks in lower prices on selected products for at least six months, to attract value-focused shoppers.
Coles' first-quarter supermarket sales growth lagged rival Woolworths' 6.9% growth in its Australian Food segment. Woolworths shares ended 1.9% higher on Friday.
David Tuckwell, CIO at ETF Shares, called Coles' trading update "soft" and said that while its new promotions should help stabilise sales, a full recovery of market share in the second quarter looks unlikely.
"Past collectibles campaigns, including Coles' own, have only lifted sales temporarily, and Woolworths is not standing still ... Christmas trading will be the real test," he said.
The company also expects to incur higher fuel-related costs in the first half due to increased prices over the past two months, meaning its first-half supermarket earnings before interest and taxes would be in line with the prior corresponding period.
Coles reported total group sales revenue of A$11.21 billion (US$7.88 billion) for the first quarter, missing Visible Alpha's estimate of A$11.31 billion. Sales were at A$10.96 billion a year earlier.
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