Coles reports retail profit uplift as sales surge
Coles has reported a lift in its retail profits for the 2020 financial year as shelf-stripping panic buying during the coronavirus pandemic caused a surge in sales.
The supermarket giant posted a retail net profit of $951 million for the 12 months ending June, a rise of 7.1 per cent compared with the 2019 financial year.
Coles' statutory net profit declined 31.8 per cent to $978 million over the period, with slump largely due to profits related to Kmart, Target and Officeworks, which remained within the Wesfarmers portfolio.
The supermarket also noted its financial performance was impacted by one-off expenses in restructuring its supply chain and forgoing the retail fuel margin on its agreement with Viva Energy.
Retail earnings before tax and interest were $1.39 billion, up 4.7 per cent compared to the previous corresponding period.
Coles said sales within the fourth quarter had been impacted by the onset of the coronavirus pandemic, with panic buying in April and May reducing inventory in canned and ambient goods, such as toilet paper and tinned vegetables.
"The mix of sales evolved following the initial period of panic buying and pantry filling, with April and May seeing a degree of de-stocking in canned and ambient pantry lines," the company said.
"Following a subdued and socially distanced Easter, sales improved as a result of increased in-home consumption."
The grocery retailer said its online services, such as click and collect, had almost doubled in capacity.
It also flagged there has been significant incremental costs related to COVID-19 in the early part of the current financial year.
Sales revenue within Coles' supermarket operations rose by 6.8 per cent over the 12 months to $32.99 billion.
Coles chief executive Steven Cain said $767 million would be returned to shareholders via a total dividend of 57.5 cents per share.
"For our many shareholders, we have successfully executed the first year of our strategic plan, restored group profit growth for the first time in four years and are on track to grow long-term shareholder value," he said.
Coles' liquor earnings for the financial year dropped 2.6 per cent to $149 million, while earnings within its supermarket divisions rose 8.3 per cent to $1.89 billion.
Coles Express was significantly impacted by lower fuel volumes sold after lockdown restrictions.
"Average weekly fuel volumes showed an improving trajectory throughout the fourth quarter as restrictions began to ease during May in parts of the country," the company said.