© Reuters. FILE PHOTO: A woman walks in the fruit and vegetables section at a Coles supermarket in Sydney, Australia, February 20, 2018. REUTERS/Daniel Munoz/File Photo
By Nausheen Thusoo
(Reuters) -Australia’s Coles Group (OTC:) on Tuesday posted a 4.8% rise in full-year profit, helped by increased supermarket, sales but missed market expectations, sending the shares down nearly 4%.
The country’s No. 2 grocer reported a net profit after tax of A$1.10 billion ($705.54 million) for the year ended June 30, compared with A$1.05 billion a year earlier. That marginally missed Refinitiv’s estimate of A$1.11 billion.
The Melbourne-based company also said it expects cost-of-living pressure to remain for Australian households in fiscal 2024.
Analysts at Jefferies called the results “disappointing”, while those at UBS expect further labour and operational costs to be headwinds for the company in future.
The company announced a final dividend of A$0.30 per share, the same as last year’s A$0.30 per share.
Coles flagged modest supermarket sales for early fiscal 2024 alongside early signs of customers shifting from out-of-home dining.
Shares of Coles Group Ltd are down 3.8 % at A$16.63 as at 0002 GMT, making it one of the top losers on the benchmark. The broader market was down 0.2%.
Coles’ higher profit comes on the back of higher supermarket sales, which help offset flat liquor sales revenue for the year.
The supermarket division, Coles’ biggest revenue-generating segment, incurred A$36,746 million revenue during the year, 6.1% higher than a year ago.
Total supermarket inflation was 6.7% for the year, significantly higher than 1.7% a year ago, the company said in a statement.
Supermarket chains are benefiting from passing on high shelf prices to the shoppers, as decades-high inflation and sky-high borrowing costs push more consumers to eat at home and cut discretionary spending.
However, the company’s liquor sales revenue for the year was flat compared with the prior year, as it grappled with COVID-19- related on-premise closures and restrictions for the first half of the year, before returning to growth of 2.7% in the second half.
($1 = 1.5591 Australian dollars)
