Coles growth piles pressure on rival

COLES is primed to again dominate its larger rival Woolworths in the battle for customers, starting the reporting season with a healthy 5 per cent jump in second-quarter sales to $7.71 billion and its 15th straight quarter of same-store sales growth.

The release on Wednesday of Coles' December-quarter sales - along with stablemates Bunnings, Kmart, Target and Officeworks - provides the first glimpse of consumer expenditure over the crucial Christmas trading period, with businesses across the country hoping for a rebound in holiday spending that will flow into 2013.

"I wouldn't say it was a booming Christmas but it was a reasonably good Christmas," said the managing director of Wesfarmers, Richard Goyder, whose Perth-based conglomerate owns Coles and a string of retail, insurance and energy concerns.

Further evidence of any recovery in the depressed retail space will emerge in coming weeks, as department stores David Jones and Myer unveil sales results for Christmas and the new year.

National retail sales figures for the December quarter will be published by the Bureau of Statistics next week.

Now under the control of Wesfarmers for five years, Coles posted same-store, or comparable, food and liquor sales growth of 3.9 per cent for the second quarter, amid slowing price deflation and a still-underperforming liquor division that dragged on the result by about 1.25 per cent.

Total food and liquor sales for the first half rose 5 per cent to $14.3 billion.

Woolworths is to release its December-quarter sales figures on Thursday and analysts predict its Australian supermarket division will post comparable sales growth of only 3 per cent, meaning Coles will maintain crowing rights in the supermarket wars.

Mr Goyder refused to claim victory in the reshaping and resurrection of Coles after years of underperformance in the hands of its previous owners.

"So far so good but there is a heck of a lot of work to do," Mr Goyder said. "Coles has a lot of improvement to do, as have all of our retail businesses.

"We are never complacent in any of our businesses and there is a heck of a lot of work to do."

The result was slightly below some analyst expectations and Wesfarmers shares fell 69¢ to $38.13.

"There will be a very strong and renewed focus in all of our retail businesses to make sure we get our customer offer right, cost base right and we continue to innovate and create value for stakeholders - our customers, our suppliers, our staff and, clearly, our shareholders," Mr Goyder said.

Elsewhere in the business, Bunnings once again proved its market power, with headline quarterly sales up 6.6 per cent to $2.198 billion. Target's sales dropped 0.6 per cent to $1.27 billion, as Kmart quarterly sales rose 3.8 per cent to $1.4 billion.