Coles boss Steven Cain remains hopeful of a quick return to economic growth as the supermarket giant unwrapped one of its highest-ever quarterly sales figures, buoyed by COVID-19 lockdowns.
Sales across the company shot up 10.4 per cent for the three months to the end of September, helped along by locked-down Victoria where spending has remained elevated. The figure marks Coles’ second-highest quarterly result since 2007.
Mr Cain said he was gunning for a “short, sharp” recession, responding to comments from Reserve Bank deputy governor Guy Debelle on Tuesday that it appeared that Australia’s economy grew through the September quarter.
“If Australia comes out of the recession fastest and first, that’s incredibly good news for us,” he said.
“But I think underneath the surface you have to look at what’s happening across the spectrum because in amongst it all, there will still be a number of unemployed people that we need to make sure we’re delivering for.”
Coles and its rival Woolworths have both seen skyrocketing sales figures over the past eight months thanks to the COVID-19 pandemic, which fuelled waves of frenzied buying early in the year as customers panicked over food supply.
Coles’ supermarket sales rose 9.7 per cent for the quarter to $8.46 billion, a result the company said was primarily driven by the state of Victoria and to a lesser extent New South Wales. Excluding Victoria, comparable sales growth was 7.7 per cent.
With restrictions in the southern state easing on Wednesday, sales may begin to moderate as the retailer moves towards Christmas, Mr Cain noted.
“It is fair to say that the tighter the restrictions, the higher supermarket sales are, and also conversely, the lighter the restrictions the lower sales will be,” he said. “But they will still be elevated compared to other years.”
The virus also prompted a rush in online orders at supermarkets, which has continued into the new financial year. Online sales across Coles’ supermarkets rose 57 per cent for the quarter. Within Victoria alone, online sales doubled as the state again was the primary growth driver.
A total of $65 million in COVID-related costs were flagged by Coles for the quarter, though the supermarket noted this was lower than the $170 million incurred by the retailer earlier in the year.
Liquor sales grew 17.8 per cent for the quarter, and the company’s petrol station-situated express stores saw sales jump 10.2 per cent.
For the first four weeks of the second quarter, sales in supermarkets continued to be elevated, up 6.4 per cent across the board or 5.4 per cent excluding Victoria. Online also grew 45 per cent through October.
Mr Cain said he expected the supermarket would continue to post solid sales figures for the next few months before hitting the “panic-buying wall” in March, where sales will start to be compared against the spikes seen earlier this year.
“I think supermarket sales in March were up more than 30 per cent, so that’s going to be quite difficult to cycle this year,” he said. “I’m very focused on trying to think about what next year might bring for us and how we might need to do things differently.”
Coles shares rose 2.7 per cent to $17.67 on the back of the sales update, which Goldman Sachs analyst Andrew McLennan labelled a “solid set of numbers”. However, Mr McLennan noted that the strong sales could start to moderate through the second quarter.
“Trends into [the second quarter] to date look a touch weaker, but the industry is poised for a strong summer of home entertainment, suggesting positive earnings conditions,” he said.
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