Despite Coles posting revenue growth of 5.2% most of which was derived from food prices increasing, the grocer’s CEO Leah Weckert says on a positive note, fresh produce and red meat costs are dropping.

However, miscellaneous grocery items, baked goods, and dairy products remain costly she told the Financial Review.

Recent earnings were posted for the fiscal year showing an increase to $41.8 billion in revenue, reinforced by supermarket sales, which increased 6% to $36.75 billion. For the net profit after tax, Coles was in line with market forecasting at $1.1 billion.

As for volumes, Weckert says they are reasonably positive in the year.

Coles is at the forefront of how the cost-of-living pressures are affecting shoppers and can provide valuable insights.

According to Weckert, she said the most impacted are younger people under 34 and young families who are feeling the inflation squeeze the most.

“They tell us that they are reducing spends on things like visits to the hairdresser and beauty services, entertainment, eating out, takeaway and coffees from the cafe are increasingly being seen as treats for a special occasion. As the shift in home consumption occurs, they are looking to the supermarket to help them to do more with their budgets,” Weckert said.

Leah Weckert, Chief Executive Officer of Coles Group

Adding to costs shoppers had to absorb was food price inflation which reached 6.7% for 52 weeks, but improved during the year from 7.4% to 6% in the second half of the year according to the Financial Review.

With the financials released, the grocery titan will pay a final dividend of 30¢ per share, bringing the year’s total dividends to 66¢, the same as last years.

The financials were close to what the analysts expected but only last week Coles highlighted more costs would be rolling to the tune of $120 million and that there would be another delay in the completion of the build of its Ocado fulfilment centre located in Victoria.

Initially, the pricing of the Ocado centre was $150 million but now the cost has ballooned to somewhere around $400 million, and the completion of the build looks like it will be delayed around a year.

Based upon profitability and other factors, Coles plans to launch around 15 new stores but also close six in 2023.

Also challenging to navigate, Weckert said that Coles and other retailers are experiencing a 20% uptick year-on-year for stock loss, coming from theft and food waste.