Coles Group Limited (ASX: COL) is cutting head office jobs in an effort to boost profit and the share price.
After 10 years being owned by Wesfarmers, Coles Group was split from the broader Wesfarmers conglomerate (which owns Bunnings Warehouse) in November 2018. However, the Coles name has operated in Australia for 100 years. Today Coles is one of the largest retailers in the country, serving 21 million customers per week across its supermarkets, Coles Express, Online, Vintage Choice and others.
Coles Cutting Costs With Job Reductions
The giant supermarket business plans to remove 450 staff from its Melbourne HQ according to reporting done by the Australian Financial Review.
Coles is changing its management around to lower labour costs and make its operations simpler.
Two of the positions that will be emptied are the Coles Chief Store Operations Officer and the Head of Coles Express, Online and Corporate Affairs. Another recent departure has been the General Manager of Corporate Affairs.
What’s Going On?
Businesses are always under pressure to lower costs and grow profit, but job losses can be quite de-moralising for a business and its staff. So Coles must be feeling the pressure in the supermarket wars to take drastic action to boost the bottom line.
The AFR also reported that Coles has is asking for bigger payments to launch new products and wants suppliers to spend their marketing and price discount budgets before the end of June 2019.
The Coles FY19 third quarter trading update was quite pleasing. The supermarkets and liquor businesses combined grew sales by 3.3% to $8 billion on the back of comparable sales growth of 2.5%.
But, it takes more than sales growth to increase the net profit. The company has to maintain profit margins to grow profit at the same pace as revenue.
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At the time of publishing, Jaz does not have a financial interest in any of the companies mentioned.