Australian grocer Coles’ full-year profit rises but marginally misses estimates

Australian grocer Coles’ full-year profit rises but marginally misses estimates

Australia's Coles flags modest start to fiscal 2024; 2023 profit rises
© Reuters. FILE PHOTO: A woman walks in the fruit and vegetables section at a Coles supermarket in Sydney, Australia, February 20, 2018. REUTERS/Daniel Munoz/File Photo

(Reuters) -Australia’s Coles Group (OTC:) on Tuesday flagged modest supermarket sales for early fiscal 2024 while posting a 4.8% rise in full-year profit.

The country’s No. 2 grocer said supermarket volumes have remained modestly positive for fiscal 2024 compared with the prior corresponding period alongside early signs of customers shifting from out-of-home dining.

The Melbourne-based company also said it expects cost-of-living pressure to remain for Australian households in fiscal 2024.

The company reported a net profit after tax of A$1.10 billion ($705.54 million) for the year ended June 30, compared with A$1.05 billion a year earlier. That marginally missed Refinitiv’s estimate of A$1.11 billion.

Coles’ higher profit comes on the back of higher supermarket sales which help offset flat liquor sales revenue for the year.

The supermarket division, Coles’ biggest revenue-generating segment, incurred A$36,746 million revenue during the year, 6.1% higher than a year ago.

Total supermarket inflation was 6.7% for the year, significantly higher than 1.7% a year ago, the company said in a statement.

Supermarket chains are benefiting from passing on high shelf prices to the shoppers as decades-high inflation and sky-high borrowing costs push more consumers to eat at home and cut discretionary spending.

However, the company’s liquor sales revenue for the year was flat compared with the prior year, as it grappled with COVID-19- related on-premise closures and restrictions for the first half of the year, before returning to growth of 2.7% in the second half.

Coles announced a final dividend of A$0.30 per share, the same as last year’s A$0.30 per share.

($1 = 1.5591 Australian dollars)

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