Key Points
- Supermarket giant Coles' sales revenue grew by 6.1 per cent year on year.
- Check-out prices increased 6.7 per cent.
- The company said it expects further growth in revenue as people choose to eat out less amid the cost of living crisis.
Cost of living pressures have helped supermarket giant Coles to a 4.8 per cent rise in profit but organised crime is increasingly threatening its bottom line.
On Tuesday, the company reported supermarket sales revenue for the last financial year grew by 6.1 per cent with cash profit rising to $1.1 billion from $1.05 billion the year before.
Customers felt a 6.7 per cent bump in check-out prices for the year, but new chief executive Leah Weckert says Coles is well placed for growth as more people choose to eat at home.
"Eating out, takeaway and coffees from the cafe are increasingly being seen as treats for a special occasion," she told analysts.
Weckert is pleased headline inflation has moderated but there is large price variation across categories.
Fresh produce prices - including for cucumbers, broccoli and capsicum - are deflating rapidly, while inflation of bakery and dairy products continues unchecked.
Sales of own-brand products grew strongly, including staples such as pasta and rice as well as premium end lines.
"Customers are still looking to have a treat and a restaurant quality meal and are increasingly looking to supermarkets to do more with their budgets," Weckert said.
Coles' gross margin increased to 26.4 per cent, boosted by reduced COVID-19 costs, technology-driven cost-cutting initiatives, growth in Coles 360 and lower tobacco sales.
But an industry-wide surge in shoplifting by organised criminals contributed to a 20 per cent increase in stock losses.
"We're certainly seeing a lot more reports coming through from stores where they see a loss that is quite large and targeted," Weckert said.
Coles aims to address the issue by having more security guards at stores as well as initiatives such as trolley locks and smart gates.
Phillip Kimber, a retail analyst at financial services company E&P Capital, says the profit result was 2 per cent lower than analysts expected and will likely weigh on the share price.
