Australian conglomerate Wesfarmers has warned investors that there are no “short-term tricks” in its plan to rejuvenate struggling supermarket chain Coles.
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Wesfarmers, which last year acquired Coles for about A$18bn (US$12.21bn), said it anticipates consumer confidence to continue to decline as economic conditions worsen.
Coles sales rose 2.6% in the three months to 30 September, the company revealed at its biannual investor briefing. Same-store sales inched up just 1.3%, below the rate of inflation.
Wesfarmers has said that its turnaround of Coles will take five years.
Ian McLeod, the unit’s recently-appointed CEO and former Asda executive, said that Coles must address promotional issues. Rather than “value destroying” heavy discounting, the supermarket business must gain market share through a sustainable and consistent strategy, he said.
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By GlobalData“If I’m constantly using short-term tricks now, then ultimately we’ll be driving the business in the wrong direction,” McLeod told the briefing.
Addressing the global financial crisis, chief executive Richard Goyder said that Wesfarmers is confident of its ability to refinance a number of debt facilities over the next year, despite the global credit crunch.
“We are very confident it will all be refinanced,” Goyder insisted.
