Full year sales revenue for Coles Group has increased to $37.4 billion in FY20, while EBIT growth was also achieved for the first time in four years, as the company cites strong performance across its supermarkets and online segments due to “implementation of the refreshed strategy”.
Coles Group snapshot (including its supermarkets, liquor and express segments):
- Sales revenue: $37.4 billion, up 6.9 per cent;
- EBIT: $1.4 billion, up 4.7 per cent;
- Statutory net profit: $978.0, down 31.8 per cent;
- Operating cash flow: $2.24 billion;
- Improved safety with 18.3 per cent reduction in Total Recordable Injury Frequency Rate (TRIFR) compared to FY19.
Across its three segments, Coles reported a comparable sales growth of 20.2 per cent in Q4 in Liquor; 8.3 per cent in Q4 in its Express convenience; and the 51st consecutive quarter of growth in Supermarkets, with a growth of 7.1 per cent.
Gross margin also increased by 30bps to 25.1 per cent, which was driven by “strategic sourcing benefits particularly in Own Brand, a more efficient supply chain as Smarter Selling benefits are realised, and a favourable mix as a result of COVID-19 customer purchasing, most notably in the health and home and fresh produce categories”.
In addition to the sales uplift from COVID-19, Coles Supermarkets’ segment sales trajectory was improving prior to Christmas and before the pandemic, which the company cites as the implementation of trusted value campaigns, extensive range reviews “providing a more tailored range for customers,” as well as a tailored store format strategy. It has also seen a growth of 18.1 per cent in Online sales revenue for the year.
Coles Group CEO Steve Cain said the company has played a part as a designated essential service and an important support role during the crises hitting Australia over the past year, and will continue to play this important role as the nation recovers and returns to growth.
“In June 2019, Coles set out a refreshed strategy to transform our business and lay the foundations to succeed in our second century. Since that time, we have been presented with a number of unforeseen challenges including drought, devastating bushfires, and of course the ongoing COVID-19 global pandemic,” said Cain.
“This has provided the greatest test of our lifetime and we are experiencing things we never thought we would see in a supermarket, or for that matter Australia.
“We owe a huge thank you to our team members, supply partners and the communities we serve for the way they have pulled together. I would also like to thank the federal and state governments for their speed of response, including establishing the Supermarket Taskforce, and unprecedented collaboration to help us continue to feed Australian families safely.
“There has, and will be, much to learn from COVID-19. We are determined to emerge as a better, stronger business and team. Our purpose of sustainably feeding all Australians to help them lead healthier, happier lives is now more relevant than ever.”
A gross debt of $1.4 billion was reported due to “change in debt profile with $700 million of external debt repaid and converted into a longer dated $600 million bond issuance with favourable coupon”. It also reported a net debt of $362 million for the year.
Coles says it has also improved relationships with suppliers throughout the year, recording the highest Net Favourable score in the Advantage Supplier Survey. The company also won the Australian Packaging Covenant’s large retailer industry award for its achievements in sustainable packaging design and recycling initiatives.
In the first six weeks of 1QFY21, Coles has seen a 60 per cent increase of online sales, driven by Victoria and ongoing COVID-19 impacts.
The company plans to retain its $1 billion cost-out target to be achieved between FY20 and FY23, as well as planning to renew 65 stores and opening 15 to 20 new stores in FY21.
