Wesfarmers Says Coles Food and Liquor Sales Rise in Quarter

By Mike CherneyFeaturesDow Jones Newswires

Australian conglomerate Wesfarmers Ltd. said food and liquor sales at its Coles grocery chain grew 1.5% in the first quarter of the fiscal year, but that a decline in food prices accelerated.

Total sales at Coles, including Coles Express convenience stores, fell 0.3% year-over-year in the first quarter to 9.37 billion Australian dollars (US$7.29 billion), reflecting lower fuel volumes. Convenience store sales fell 9.5% on-year. Still, Coles saw comparable-store food sales grew 0.3% and comparable-store food and liquor sales rose 0.4% in the quarter.

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Wesfarmers Managing Director Richard Goyder said sales at the company's retail businesses in the first quarter was generally pleasing. Australia and New Zealand sales for the Bunnings hardware chain rose 11.5%, Kmart sales rose 9% and Officeworks sales rose 7.8%. But Target sales fell 6.4% and sales at Bunnings in the U.K. and Ireland fell 17.5%.

Coles is locked in a tough battle for market share with chief competitor Woolworths Ltd., as well as new entrants including German discount chain Aldi, which has contributed to lower food prices. Ahead of the results, some analysts said Coles appeared to be losing ground to Woolworths in the recent period.

Wesfarmers said food and liquor prices fell 2.3% in the first quarter, largely due to fresh produce, compared with a 0.8% decline in the fourth quarter of the previous fiscal year. Excluding fresh produce, Wesfarmers said prices fell 1.3% in the first quarter, broadly in line with the previous quarter.

"There are still many opportunities for growth in the business," said Coles Managing Director John Durkan. "We continue to focus on increasing our penetration in 'fresh,' improving our store network, investing in new routes to market, and simplifying our business in terms of range and our cost of doing business."

In its resources business, Wesfarmers said first-quarter production of steaming coal at its Curragh mine fell 12.6% compared with the previous quarter, while metallurgical coal production rose 3.9%. At the Bengalla mine, Wesfarmers' share of steaming coal production fell 6.6% quarter-on-quarter.

Write to Mike Cherney at mike.cherney@wsj.com

(END) Dow Jones Newswires

October 24, 2017 18:31 ET (22:31 GMT)