The Coles retailing business of Wesfarmers is starting to look like one of the standout retailing performers for 2009-10, especially in the 4th quarter.
The group as a whole did well and did better especially as the year went on, while Woolies, its arch rival, finished the year on a flat note.
And yesterday Harvey Norman surprised by reporting a rise of just 0.8% in its 12 month headline sales, which is worse than inflation. Same store sales were up just 0.2% (see separate story).
That echoes weak performances from Woolies Big W and Dick Smith chains and from Wesfarmers’ Target chain.
Yesterday Wesfarmers said sales across the group, including the Bunnings home improvement business, rose 3.7% to just over $45 billion (Woolworths group sales rose 5.1% to around $51.7 billion in the year to June).
The news saw Wesfarmers shares jump more than 90c, or over 3%, to $30.08.
That’s the highest the shares have been since April.
Without Bunnings included, sales rose 3.8% to just over $38 billion from $36.6 billion in 2009. That includes supermarkets, Officeworks, Target and Kmart.
Wesfarmers said 4th quarter group sales (including Bunnings) rose 4.8% to nearly $11.1 billion. Without Bunnings, sales rose 4.6% to $9.630 billion.
Woolies said its 4th quarter sales rose 3.9% to $11.6 billion.
The key business for both retailers is their respective supermarkets and liquor chains.
They make most of the sales each quarter and year and generate well over half the earnings.
Wesfarmers said yesterday that sales at its Coles supermarkets group rose 4.3% in the 12 months to June 27, driven by a 5.5% rise in the June quarter.
(Woolies reported a 4.2% rise in its 2009-10 supermarket turnover, and a 3.4% rise in the 4th quarter.)
Sales at Coles supermarkets for the 12 months to June 27, 2010 totalled $29.77 billion compared with $28.55 billion a year earlier.
Woolies supermarket business had 12 month sales of $44.28 billion, compared with $42.49 billion a year earlier.
(Woolies supermarkets business has sales that almost equal all of those from Coles, with Bunnings included, or more without Bunnings.)
Coles’ supermarket sales in the 4th quarter totalled $7.448 billion, Woolies $11.6 billion.
Sales at Coles supermarkets open at least a year rose 4.2%, more than double the 1.8% rise in same store sales reported by Woolies last week.
Sales in the company’s home improvement and office supplies stores increased by 9.9% over the year to $7.82 billion, with the big driver Bunnings, which reported solid growth of more than 10% for the year.
Target and Kmart both reported marginally positive sales growth for the year, achieved in what was a difficult trading period in the second half, the company said.
"Pleasingly, both businesses saw positive customer growth in the second half, in particular in Kmart where it continued to significantly restructure its customer offer," the company said.
Kmart sales for the year were up 0.4% to $4 billion, while sales for Target stores rose 0.9%.
For the final quarter, sales at Bunnings and Officeworks rose 6.5% to $1.8 billion in the fourth quarter.
At Bunnings, Australia’s largest hardware chain, sales rose 6.9% to $1.47 billion and it remains the best performing part of Wesfarmers retail group.
Revenue from Officeworks rose 4.7% to $356 million.
Kmart sales rose 1.1% to $914 million in the quarter.
Lower demand for toys and electrical goods saw the Target discount department stores post a 4.4 % drop in sales to $872 million, the only one of Wesfarmers four retail groups to post a decline in sales in the 4th quarter. The fall was due to the absence of federal government stimulus spending from a year ago.
In the statement, Wesfarmers chief executive, Richard Goyder, said the retail division’s sales performance for the year was solid overall, especially given the positive impact of the government’s stimulus payments on sales in the prior corresponding period, which had now worn off.
"Good progress continues to be made on growth strategies across the group’s retail businesses, with customers responding well to improvements in product range, value and service," Mr Goyder said in the statement.
"Over the last 12 months, our retail businesses have established or reinforced sound business platforms and have strategies in place to further improve the customer experience.
"The Coles division reported solid sales for the year, underpinned by strong customer growth, as it completed the first phase of its turnaround program. Deflation continued in the second half of the year, driven by fresh produce deflation and continued investment in lowering everyday prices.
"Fourth quarter food and liquor price deflation was 1.4 per cent, despite the increase in tobacco excise during this period.
"Bunnings’ sales growth was strong for the year, as the business continued to invest in its retail and trade network.
"Officeworks reported pleasing sales growth for the year, as customers responded positively to a revitalised offer."
"Target and Kmart both reported marginally positive sales growth for the year, achieved in what was a difficult trading period in the second half, primarily due to cycling the Australian government stimulus package, and a competitive retail environment that
