Coles again trumps Woolies in tough market
WESFARMERS has trounced rival Woolworths in the supermarket wars for the ninth consecutive quarter, but the owner of Coles didn't have it all its own way.
WESFARMERS has trounced rival Woolworths in the supermarket wars for the ninth consecutive quarter, but the owner of Coles didn't have it all its own way.Liquor sales were lost to the Woolworths-owned Dan Murphy's, while the Target and Kmart merchandise and apparel stores reported flat to negative sales growth.The Perth-based conglomerate proved it too was vulnerable to the malaise washing through the Australian retail sector, with its fourth quarter sales showing growth at its star performer Bunnings hardware chain impacted by the consumer downturn.Described as a "solid" result given the backdrop of declining consumer confidence, price deflation and poor weather conditions, Wesfarmers chief executive Richard Goyder keeps bragging rights over Woolworths in the battle for shoppers.But while Mr Goyder stopped short of openly declaring victory he did claim to offer the best prices on supermarket shelves."We have had a really strong focus on strategy in trying to get 'price trust' from our customers through delivering much better value," Mr Goyder said."And we are doing that through the 'Down Down' program, we are doing that through weekly price promotions and we now know we are in a much stronger position on price with our customers."While Woolworths disputes which supermarket has price leadership, the latest figures shows Coles's sales have been growing at a faster rate for nearly two years. Wesfarmers yesterday reported 5.3per cent growth in food and liquor sales to $6.18 billion for the final quarter of 2010-11, taking full-year sales for the Coles business to $25.02 billion or a gain of 6.3per cent.Woolworths last week reported comparable sales growth of 4per cent for the fourth quarter and only 3per cent for the 2010-11 financial year.Coles more than doubled the sales growth over its rival, but Woolworths remains the leading supermarket chain with total annual sales of $36.2 billion. But it wasn't a spotless performance by Wesfarmers. Its food and liquor sales result was still below expectations and Bunnings showed signs of stress from the poor trading conditions, leading the market to whack Wesfarmers stock.Shares in Wesfarmers fell 72?, or 2.4per cent, to $29.37 as investors looked beyond the tit-for-tat supermarket battle to concerns of weakness at Wesfarmers' biggest retail-exposed businesses. Bunnings had fourth quarter sales of $1.55 billion, up 6.1per cent, while full-year sales at the hardware group were $6.77 billion, up 5.7per cent for the year. The result was below expectations.Wesfarmers' discretionary businesses, Target and Kmart, were hurt by the gloomy consumer outlook and deflation. Target's fourth quarter sales rose 2.9per cent to $897 million but were down 1.2per cent for the year. Kmart recorded quarterly sales of $907 million, down 0.8per cent. For the 2010-11 year, sales were 0.4per cent up at $4.02 billion."With the backdrop of a very difficult retailing environment, I think Wesfarmers delivered a very very credible result, right across the board," said Ausbil Dexia chief executive Paul Xiradis."The results were marginally below forecast," said Credit Suisse analyst Grant Saligari. "But generally it was still a solid result."