The Coles Group Ltd (ASX: COL) share price is currently up after revealing its sales performance for the first quarter of FY24.
Coles share price
This update relates to the 13 weeks from 26 June 2023 to 24 September 2023.
FY24 first quarter sales
Coles said that its supermarket sales increased by 4.7% to $9.2 billion, liquor sales went up 1.8% to $851 million and ‘other’ sales were $214 million.
The company entered into a product supply arrangement with Viva Energy Group Ltd (ASX: VEA) on 1 May 2023, as part of the divestment of the Coles Express fuel and convenience retailing business. Revenue from the arrangement will be recognised in the ‘other’ segment.
Coles supermarkets saw total inflation of 3.1%, while inflation excluding tobacco and ‘fresh’ was 5.7%. E-commerce sales rose 24.6% to $852 million, representing 9.1% of sales, up from 7.7% in the first quarter of FY23.
Coles blamed the inflation on farmgate milk prices and higher commodity prices, including cheese, eggs and oil.
Supermarket volumes were positive in the quarter with stronger food volume growth partly offset by lower volumes in the non-food discretionary categories.
Outlook for the Coles share price
Coles revealed that in the early part of the second quarter, supermarket and liquor sales revenue growth were “broadly in line” with the first quarter.
It’s going to keep focusing on “delivering value” across its everyday prices.
“Enhanced” process, security and service measures have reduced the amount of product losses that Coles was seeing, which have been rolled out across its supermarkets in the first quarter and will continue into the second quarter.
Coles has seen improvements in waste and markdown during the quarter. Skip Scan and Smart Gates are expected to be operational in over 250 of the most impacted stores by the end of 2023.
The company also said that a number of broader cost and margin optimisation measures have been initiated across the business “with some benefits expected in the first half.”
While rising costs complicates the picture for Coles shares, I think it’s at a good enough value to invest for the long-term, with its dividend being one of the attractive features.
