Finance Consumer Little Shop a big winner for Coles’ bottom line

Little Shop a big winner for Coles’ bottom line

Coles is still getting joy from its Little Shop promotion – and now it's showing in sales figures. Photo: Coles
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Coles’ wildly successful Little Shop campaign has helped the supermarket chain to its best quarterly sales figures in years.

The company’s sales were up 5.1 per cent in the three months to September, as preparations continue for a vote on parent company Wesfarmers’ proposed demerger.

Wesfarmers credited the Little Shop promotion – in which customers who spent $30 were given mini figures of Coles products – and investment in Flybuys promotions for the bumper result.

The Little Shop campaign was a massive winner with customers, increasing sales of some products by 50 per cent, and leading to full sets of promo products being sold on eBay for as much as $1000.

The sales figures, to September 23, compared to a 0.3 per cent lift in the corresponding period last year. They were also up on the previous quarter’s 1.8 per cent lift.

Managing director Rob Scott said the growth showed Coles had continued to focus on in-store execution as shareholders prepare to vote next month on a proposed $20 billion demerger.

“Strong growth in basket size, transaction numbers and units sold, as well as improvements in fresh market share supported the sales result,” he said.

Coles’ comparable liquor store sales growth was up 1.3 per cent for the quarter. That was less than the previous quarter’s growth of 2 per cent, and slightly down on the 1.6 per cent rise in the corresponding period last year.

The convenience store business was pulled down by a drop in comparable fuel volumes, down 15.9 per cent, but comparable in-store sales excluding petrol sales was up 3.4 per cent because of a focus on food-to-go range, the company said.

The ABC reports that analysts expect Coles’ main rival, Woolworths, to report quarterly sales growth of about 2 per cent next month.

If Woolworths’ sales grow by any less than 5 per cent, it would the first time in seven quarters that it has been outperformed by Coles.

Wesfarmers shareholders will vote on the demerger on November 15. It is anticipated that Coles shares will be listed on the ASX on November 21, subject to regulatory approval.

Investment bank Credit Suisse has valued a de-merged Coles, as a stand-alone business, at $21 billion.

Wesfarmers will retain a 15 per cent stake in Coles, and 50 per cent ownership of its Flybuys loyalty program.

-with AAP