Coles Sees Slowdown in Comparable Sales Despite Beating Market Estimates

(Reuters) – Australia's Coles saw a slowdown in comparable sales in the first quarter on Thursday due to lower shelf prices for its products, even as it beat market estimates for group sales.

Supermarket duopoly Coles and larger rival Woolworths face pressure to cut shelf prices amid widespread criticism over a cost of living crisis in Australia.

The country's second-largest grocer reported a drop of 122 basis points in comparable sales to 2.4% for the 13 weeks to Sept. 29, down from 3.6% in the same period last year.

However, Coles posted a 2.9% increase in first-quarter sales revenue to A$10.55 billion ($6.94 billion), surpassing a Visible Alpha consensus of A$10.51 billion, compared to A$10.25 billion a year earlier.

"Cost of living remains a challenge for many of our customers, and we are focused on helping them find value in our stores through weekly specials, value campaigns, Flybuys, and exclusive brands," said Coles Group CEO Leah Weckert.

The supermarkets division benefited from promotional discounts and giveaways, while its e-commerce division saw a surge in revenue thanks to new features and developments.

Currently under investigation by the national corporate regulator for allegedly misleading customers, Coles announced plans to construct its third automated distribution center in Truganina, raising its capital expenditure expectations for fiscal 2025 to A$1.3 billion, up from A$1.2 billion.

($1 = 1.5211 Australian dollars)