Coles, set to change MD, reported 11% rise in H1 profits

Coles, set to change MD, reported 11% rise in H1 profits

Coles, Australia's second-largest grocer, has booked a near-11% rise in half-year earnings after its underlying sales growth quickened in the second quarter.

The retailer, which is said to be enjoying an almost six-year high in market share, reported a 10.7% increase in EBIT to A$836m (US$755m) for the 27 weeks to 5 January.

Headline food and liquor sales at Coles were up 4.7% at A$15.0bn.

Comparable food and liquor store sales were up 3.6%. In the first quarter, sales rose 3.4%.

Coles said food and liquor deflation "eased" in the second quarter with seasonal conditions weighing on the supply of produce and a hike in tobacco tax.

However, the retailer said its "continued investment in lowering prices for consumers" offset "inflation pressures".

Coles said its moves to invest better efficiency in cutting prices led to higher customer numbers and items per basket. The retailer said a "record" number of shoppers visited Coles over Christmas.

At the end of 2013, Coles' share of the Australian grocery sector stood at 33.5%, compared to Woolworths' 39%, according to local industry analysts Roy Market Research. The analysts said Coles had narrowed the gap to Woolworths and had seen its market share grow to its highest level since March 2008.

The retailer yesterday announced MD Ian McLeod, who joined the business six years ago, would move to a "senior role" within parent company Wesfarmers, the retail-to-mining conglomerate.

The former Asda executive will be succeeded by Coles COO John Durkan. Both men will formally take their new roles in July.

Click here for Dean Best's take on McLeod's tenure at Coles.