Wesfarmers chief Richard Goyder has said Coles' price cutting activities will continue as the supermarket works to regain “price trust” from consumers.
Wesfarmers announced on Thursday that it had increased its first half profit by nine per cent, led by earnings growth from its Coles and Bunnings chains. The Coles supermarket chain increased its earnings by 15 per cent to $755 million as more shoppers walked through the doors.
However, Goyder said the turnaround at Coles was far from complete and the grocery store chain would continue to cut costs and increase sales.
"Over the coming years we want to continue to improve the profitability of the business, hopefully though driving sales as well as greater efficiency particularly through the supply chain," he said.
Goyder denied concerns that Coles was cutting its prices at the expense of its suppliers and said that since it acquired the business in 2007 it had worked hard to get “price trust" back for its customers.
"Australian consumers for too long have worn higher and higher prices for food and groceries in this country, above the rate of inflation," he said.
"And in fact, if you will recall, the Rudd government considered a food price inquiry in 2008.
"What Coles has done over a period of time is reduce prices for customers and we forced others to follow and that's been a very good thing for consumers."
Overall Wesfarmers made a net profit of $1.29 billion in the six months to December 31, up from $1.176 billion in the previous corresponding period.
Its retail business earnings were up 9.4 per cent to $1.705 billion but the group's resources division suffered a 63 per cent slide to $93 million.
