Coles Liquor earnings down as margin pressure bites

February 6, 2020
By Alana House

Margin pressure has hit Coles Liquor’s bottom line in the first half of FY20.

Coles Group announced: “Despite a satisfactory outcome on sales, Liquor EBIT in the first half of FY20 was down on the prior corresponding period as a result of margin pressure and was impacted by clearance and promotional activity following the commencement of strategic range reviews.”

Comparable sales growth in Liquor were 2.1% for the second quarter and 1.5% for the first half.

Darren Blackhurst; Coles Liquor margin pressure

British supermarket veteran Darren Blackhurst (above) was appointed as Coles Liquor Chief Executive in October 2019 and arrived in Australia last month.

He has more than 25 years’ experience in international retailing and has managed the liquor space at Morrisons, ASDA and Tesco.

In a trading update ahead of its 2020 Half Year Results announcement, Coles reported that in the early part of the second quarter, supermarkets comparable sales growth had trended towards the level achieved in the fourth quarter of the 2019 financial year.

However, the success of the Christmas campaign exceeded expectations, with supermarkets delivering comparable sales growth of 3.6% in the second quarter and 2% for the first half.

Supermarkets EBIT growth in the first half of FY20 benefited from incremental costs incurred in the first half of FY19 relating to the removal of plastic bags and increased flybuys promotions, which were not repeated in the first half of FY20. The cycling of these prior year incremental costs is not expected to reoccur in the second half of FY20.

Further detail and trading outlook will be provided at Coles’ interim results for the 2020 financial year on Tuesday, February 18, 2020.

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