Coles sees inflation moderating as it appoints new CEO
By Emma Koehn
Coles says shoppers are flocking to the company’s homebrand products amid rising costs, but there’s relief in sight as price growth in its supermarkets has been easing since the start of the year.
The supermarket giant revealed on Tuesday morning it has appointed the first female chief executive in its 109-year history, with the boss of its Commercial and Express division, Leah Weckert, set to take the top job when outgoing chief executive Steven Cain retires in May.
Weckert, who joined Coles in 2011, had been mooted for the role after she was appointed head of Commercial & Express last April, making her responsible for business units including grocery, non-food, dairy, fresh produce and meat and deli as well as Coles’ homebrand, its food manufacturing facilities and its Coles Express shops.
She said there were many exciting projects on the horizon for the grocery giant, which is making major automation investments at its distribution centres along the east coast.
“I’m really looking forward to working with our 130,000 team members to deliver,” she said.
Presenting his last set of results on Tuesday morning, Cain said price inflation across the company’s supermarkets business had accelerated to 7.7 per cent in the three months to December, up from 7.1 per cent in the September quarter. Packaged goods and dairy price increases drove that inflation, with more suppliers putting through cost increases.
But Cain flagged that inflation was expected to cool later this year, with price growth having started to ease in the current quarter. “We expect headline inflation to moderate throughout the remainder of the [June] half, particularly in relation to anything from farms,” he said.
Australia was currently seeing a “tale of two cities”, where some households were willing to keep buying premium goods, while others were now clearly on tight budgets, he said. “Own brand sales increased by 12 per cent in the quarter as our customers look for great value.”
Revenues across the business rose 3.9 per cent to $20.8 billion for the first half of the 2023 financial year, and profits jumped 11.6 per cent to $616 million.
The group’s supermarkets business saw revenues up 4.6 per cent to $18.8 billion, though sales in its liquor business were down by 2.4 per cent to $1.9 billion compared with the previous half, which was heavily affected by shoppers staying at home because of the pandemic.
Fresh food inflation moderated from 8.8 per cent in the first quarter to 7.1 per cent in the three months to December, as growing conditions improved for a range of produce.
Cain will retire from the top job after joining Coles in 2018. His tenure included its demerger from Wesfarmers as well as steering the business through the COVID lockdown years. He will stay on for an “interim period” after May to help in the transition, Coles said in a statement to the ASX.
The company has declared a 36 cent interim dividend for the first half, up from 33 cents at the same time last year.
Shares opened 0.5 per cent higher to $18.39.
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