Coles Q1 2025 Earnings Call Highlights
Coles reported a solid first quarter result, with sales largely in-line with market expectations. Here's what management have to say.
Mentioned
Coles (ASX: COL) reported a solid first quarter report that was largely in-line with market expectations, while the business navigated intensifying competition and price deflation.
1Q25 Earnings Summary
Total group sales up 2.9% to $10.5 billion
Supermarkets revenue up 3.5% to $9.5 billion
Liquor revenue unchanged at $851 million
eCommerce sales up 22.4% in Supermarkets but down 1.9% in liquor
Announced an agreement to construct a third distribution centre in Victoria
The project is expected to commence in FY25 and as a result, Coles expects its capex for FY25 to increase to $1.3 billion (from previous guidance of ~$1.2bn)
Earnings Call Highlights
The below topics have been answered by CEO Leah Weckert and COO Anna Croft.
Q1 volume growth: We delivered positive volume growth driven by value campaigns, our Winter of Sports giveaway campaign, as well as our exclusive brand portfolio.”
On loyalty and customer engagement: “Through our loyalty program, we saw Flybuys active members grow by 4.1%, with more than 20% growth in members participating in personalized value offers.”
Promotional intensity: “We saw a positive customer response to our Winter and Spring value campaigns, as well as our other investments in value across the portfolio, including into Own Brand cheese and everyday staples in the Coles Simply range.”
New distribution centre in Victoria: “We launched with the ASX today...an investment of AUD 880 million to construct our third ADC, which will be located in Truganina, Victoria. This further investment in technology will enhance product availability for our customers and improve efficiency across the supply chain.”
Cost and inflation trends: “Pleasingly, customers saw deflation in meat, dairy, health and beauty, and homecare categories during the quarter. Overall, Supermarkets inflation excluding tobacco declined to 1%, remaining well below historic levels.”
Outlook: "Supermarket sales revenue has remained broadly in line with the first quarter, and volume growth is supporting this with investments that we've continued to make across the portfolio to help support families in the lead-up to Christmas.”
Liquor outlook: “Revenue growth remains subdued, and the business is focused on making sure we've got a compelling value proposition for the festive season.”
Analyst Q&A Highlights
Question on promotional environment and competition: "The broader market playing very competitively and we're now tracking a broader range of competitors than we were 12 months ago to make sure that our customer offer in every single category is competitive and that we continue to offer the customer the full shop and the ability to do that ... What we are doing is coupling that with a strategy in each of the categories, which is really focused on entry price points to make sure that customers have no reason to go anywhere else."
Is changing consumer behavior affecting how you need to think about costs, particularly with average basket sizes coming down: "When we're designing the promotional programs that, we have a good mix of products within that at really good discounts that will fall into those big baskets."
What do you think you're winning share of shops at the moment: "I would say the winners in the market at the moment are Aldi and probably to a lesser extent some of the really value-focused specialists like fruit and veg stores."
Can you provide more color on customer feedback, particularly around areas like reorder rates: "We're seeing a pretty significant improvement in customer experience measured by NPS. Our hypothesis on availability more than came true, and so that's massive, especially in online for customer experience."
More on customer behaviour, especially concerning private label growth, promotional intensity and how is Coles competing with Aldi: "I mean there's no question that I think Aldi is performing well across all customer cohorts at the moment. I would say based on all the data we're seeing, we actually are probably doing better than we have been in the past. We value customers ... customers are starting to pull back on eating out at restaurants to help balance the budget ... we definitely are working hard through areas like our convenience range to really lean into being a destination for those types of products."
This article was generated with the support of AI and reviewed by an editor.
