Australian grocery retailer Coles has posted an increase in its first-quarter sales, despite a “tough” retail environment.

Sales for the 13-week period ending 25 September were up 8% to A$8.09bn (US$8.23bn). Coles’ food and liquor sales were up 5.5% to $6.28bn, while its convenience sales reached $1.82bn, up 17.7%. Excluding fuel, Coles’ convenience sales were up 1.8%. On a comparable-store basis, Coles’ convenience sales increased 0.6%.

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The retailer’s comparable food and liquor store sales grew by 5.2%

Coles managing director Ian McLeod said the first-quarter results represented strong progress in a “tough retail environment”.

Prices from Coles’ food and liquor division fell 1.8% during the quarter as the retailer cut prices on groceries amid its battle with Woolworths Ltd. Coles also reported lower fresh produce inflation as crops began to recover from flood and cyclone damage earlier in the year.

The retailer said its food and liquor sales growth reflected the “positive customer response to ongoing improvements across the business”, including its ‘Down Down’ promotional campaign.

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However, McLeod was cautious about the trading environment for the rest of the year. “Weak consumer confidence in the face of rising living costs will continue to make trading conditions challenging in the lead up to Christmas,” he said.

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