Wesfarmers’ shares partly recovered from a sharp and irrational sell-off yesterday after it released its 4th quarter financial year 2011 sales figures for its Coles and Bunnings retail chains.
The sales figures showed solid growth in the 4th quarter, and as expected for the full 12 months in the Coles Group supermarkets, Bunnings and Officeworks, and average to below par sales growth for Target and Kmart.
But on the whole they were better than the effort revealed by Woolies, except Woolies’ 4th quarter sales growth in its supermarkets and liquor business was a bit stronger.
But that was no reason for the shares to be sold off so sharply; at one stage they were down 4.1% or more than $1.20 at around $28.85 in morning trade, a 52 week low.
In a market down 1.3% at the time, it was an irrational sell-off.
Investors slowly came to their senses and the Wesfarmers regained ground over the rest of the day to close down 2.4% or 72c at $29.37.
Wesfarmers says sales at its Coles-owned chains rose 6.7% to $31.768 billion in the 2011 financial year, much better than the 4.7% rise reported last week in group sales for the year from bitter rival Woolworths to $54 billion.
Wesfarmers key supermarkets and liquor divisions recorded a 6.3% increase in sales to $25.025 billion for the year, against a 4.3% rise, to $46.3 billion reported by Woolies for its supermarkets and liquor business.
Coles also reported that sales at its home improvement and office supplies divisions rose 5.4% to $8.24 billion.
But Target sales fell 1.2%, while Kmart sales rose just 0.4% in the year.
Woolies’ Big W chain had a similar experience: same-store sales at Woolies’ Big W rose 2.8% in the fourth quarter and fell 0.8% for the year.
Comparable store sales were down 2.5% for the year but up 2.8% (on a 5.0% lift in overall sales) in the 4th quarter.
Fourth-quarter sales from supermarkets and liquor stores open for more than a year grew 5.2%, against forecasts for 6-7% from some brokers who were just too optimistic.
They were also slower than the 6% improvement reported by Woolies.
Total 4th quarter sales from its Coles supermarkets, liquor and convenience stores rose 7.2% from a year ago to $7.98 billion.
Analysts had expected a 1.6% drop in sales at Wesfarmers’ Kmart discount stores, but 4th quarter like-for-like sales fell only 0.1%.
In the statement with the figures Wesfarmers managing director Richard Goyder described the retail divisions’ sales performance as solid, given the backdrop of declining consumer confidence, significant price deflation and adverse weather conditions experienced during the period.
"A highlight of the result was the continuation of the strong sales momentum in Coles and Bunnings, building on strong results from the previous year,’’ Mr Goyder said in a statement.
"The result reflects the re-investment of productivity gains in lower prices, category expansion and the continued focus on growing the store network to position the business for future growth."
Meanwhile the much awaited AGM for Macquarie Group in Sydney yesterday was either predictably upbeat, or downbeat, depending on your view of the company.
Australia’s major investment bank maintained its earnings guidance, with crossed fingers and qualifications.
Macquarie reiterated that its outlook for earnings for the year to March 2012 would be higher than 2010-11, on expectations of a stronger second half.
It didn’t, as some analysts had forecast, sharply downgrade its outlook in the face of weak markets and poor results from the trading and other divisions of major competitors like Goldman Sachs, Morgan Stanley, UBS, Deutsche Bank and Credit Suisse.
But it left open the door to a possible downgrade later in the year if markets took a turn for the worse, given debt crises in Europe and the US (where it has been trying to expand to offset its dominant position in Australia).
But Macquarie also said that the first half result for fiscal 2012 would be lower than a year earlier because of a higher tax rate and the absence of the benefit of the MAp AVS reclassification included in the prior corresponding period.
"The FY12 result also remains subject to a range of other challenges including movements in foreign exchange rates, increased competition across all markets, the cost of our continued conservative approach to funding and capital, and regulation, including the potential for regulatory changes," chief executive Nicholas Moore said in a statement yesterday.
The market took a brief glimpse at the statements from the AGM, looked at the debt ceiling fiasco in the US and took to Macquarie shares, knocking them down nearly 5% or $1.52 to $27.81, close to the 52 week low of $27.35 hit a fortnight ago when the first downgrades started emerging from analysts.
the shares closed at $27.99, a fall of $1.34 on the day or 4.6%.
Macquarie said in the statement that the contribution from operating groups in the first quarter of the current fiscal year was ahead of the same period a year earlier but down from the preceding quarter.
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