The country’s second-largest supermarket group, Coles Group (ASX:COL), will pay shareholders 3% more in total dividends for the 2023-24 year after a 2.1% increase in earnings to a new high of $1.1 billion.
The supermarket giant said revenues rose 5.7% to a record $43.6 billion (normalised because 2023-24 was a 53-week year and 2022-23 was 52 weeks when sales were up 5.9%).
Second-half sales growth slowed after interim sales had increased by 6.8% to $22.2 billion (first-half sales for retailers are always larger due to the Christmas food rush in December).
Food sales (normalised) at its supermarkets rose 4.3% to $39 billion—growth slowed from the 4.9% increase in the first half; while liquor sales were largely flat at $3.7 billion (up 1.9% at the halfway mark).
Total dividends to shareholders increased from 66 cents per share to 68 cents a share with the payment of a 32 cents a share final.
Coles Group includes the Coles and Coles Local stores, Liquorland, First Choice Liquor Market, and Vintage Cellars.
“There have been a number of challenges throughout the year, including changing customer behavior, increased external scrutiny, and cost inflation,” CEO Leah Weckert said in Tuesday’s release.
Household financial pressure was “front of mind,” she added.
Coles said price growth in its supermarket aisles slowed, with inflation for products excluding tobacco easing to 1.5% in the six months through June from 2.9% in the December half. The figure was 2.2% for the year, well below the CPI rate of 3.8%.
Coles saw online sales jump 30.1% for groceries and 9.2% for liquor.
Coles said it expects to open around eight new stores, close five stores, and renew approximately 50 stores over 2024-25 and invest a total of around $1.2 billion. It will also finish new distribution and online fulfillment centers in Sydney and Melbourne.
Coles chief executive Leah Weckert said financial pressures on households and families were front of mind for the supermarket.
“We have endeavored to deliver value across our supermarket, liquor, and online offerings to help customers balance the household budget. At the same time, we have worked hard to deliver improvements in availability and quality,” she said in a statement.
The company has also made major inroads in addressing theft, improving its digital platforms, reducing costs, and completing the construction of warehouses.
In fact, the company said its anti-shoplifting security “Skip Scan loss technology” had been rolled out to 546 stores; “Smart Gates” in 326 stores; and “Bottom of Trolley technology” in 455 stores. Coles has 856 supermarkets, so the Skip Scan technology is now operating in more than 63% of the group’s outlets.
Coles shares were up 1.6% in mid-afternoon trading.
Coles said that the new financial year had started well with supermarket sales up 3.7% in the first eight weeks “with positive volume growth and increasing momentum as the quarter progressed driven by our value and Winter of Sports campaigns.”
“We continue to see signs of customers shifting from out-of-home dining with our Coles Finest range and convenience meals remaining higher growth categories.”
“In Liquor, in the first eight weeks, sales revenue declined by 1.4%. The CrowdStrike outage in July impacted the period given the number of liquor stores that were unable to trade during the outage. Excluding the impact of CrowdStrike, Liquor sales revenue declined by 0.3%. The overall Liquor market remains challenging and sales continue to be impacted by the transition away from less profitable bulk and affiliate sales.”
