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Coles Hopeful CBDs Will “Come Back To Life” As Earnings Dive

Coles CEO Steven Cain is banking on the opening up of the economy, the return of workers to the CBD, and the flattening out of COVID-19 costs, to all make for a happy 2022.

This comes as Coles reveals its half-year results, which show that pre-tax earnings fell 4.4 per cent to $975 million, hit hard by COVID-19 disruption costs of $150 million, travel restrictions hurting its Express petrol arm, and “transformation project costs”.

Sales revenue grew 1 per cent, to $20.6 billion, driven by supermarket chain sales rising 2 per cent to $18.58 billion, and liquor sales, which rose 2.6 per cent, to $2 billion.

As noted, Express sales dropped, 8.1 per cent, to $615 million.

Coles supermarkets earnings fell 0.8 per cent fall to $896m, liquor earnings at First Choice and Vintage Cellars fell 4.8 per cent to $99 million, and Express earnings dropped a massive 62.5 per cent, to just $12 million.

Net profit fell 2 per cent overall to $549 million.

January costs relating to COVID-19 hit $30 million in January alone (outside the above reporting period) which Cain expects to ease.

Coles’ interim fully franked dividend has remained at 33c a share, payable on March 31.

Cain is hopeful that things will get brighter, and soon.

“People stayed indoors before moderating at the end January into February, there‘s been huge variation, it has to be said, in sales performance between states, store locations and on a week-to-week basis,” Cain said.

“There’ll be a few ups and downs and in broad terms we know from the last time that the economy opened up and restrictions ease that we are the beneficiary of local shopping.

“We expect as availability improves the shopping centres will come back to life and all of those things are beneficial to Coles.

“On the other side of the equation obviously the return to work will be good for CBDs which is good news for them. But obviously that will have an impact on breakfast and lunch sales given that most people you know all those office workers have been eating that at home, but overall, we’re pretty optimistic that we’ll see a continued improvement in our market share as it all unwinds.”

Cain pledges Coles will be “doing our best to protect our customers” from inflationary pressure, noting “that will be the number one priority” for the Group.

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