Supermarket giant Coles has been weathering the ire of dissatisfied shoppers annoyed by massive product shortages and says the problem has only eased in parts of Australia.
Delivering its first-half results on Tuesday, the retailer said customer satisfaction had been “stable” but “softened late in the half due to availability challenges driven by Covid-19”.
The supply chain was also in turmoil for weeks after flooding in South Australia’s Nullarbor in January damaged a 300km stretch of transcontinental rail track, forcing retailers to ship goods to Western Australia.
Some supermarket shelves in Perth have been the barest they have ever been throughout the pandemic, as the flood disruption combined with shoppers quietly panic buying as evidence mounted that Omicron had well and truly arrived in the state.
Train deliveries only resumed last week, and Coles Group chief executive Steven Cain said the road and rail recovery operation to bring supplies into WA had been highly disruptive.
“I would … like to thank our customers for their support during periods of reduced product availability in store which is now improving on the eastern seaboard,” Mr Cain said.
The retailer reported total sales revenue had inched 1 per cent higher to $20.6bn over the 27 weeks ending January 2 compared with the same period in fiscal 2021.
Sales revenue for Coles Express petrol station/convenience stores was down 8.5 per cent due to lower fuel sales, as Covid restrictions reduced mobility and traffic flows, but picked up in the early part of the second quarter as lockdowns affecting much of the nation ended.
The supermarket revealed that at Christmas, after such a tough year, customers opted for top-shelf products, including rock lobster, croissants, macarons and premium cheese.
The retailer has also been very active changing its product range, with more than 300 completed during the half year in categories such as health foods, convenience meals, international and Indian/Asian foods.
“Innovation was also delivered with pet treat bars added to a further 115 stores,” Coles said.
It reported price inflation for meat was more than offset by fresh produce deflation, predominantly fruit due to favourable growing conditions.
In liquor, increasingly popular growth products included gin and seltzers, while trending wine categories were lighter red varietals and rose.
Coles also expanded Click & Collect services as xjmtzywwell as home delivery to regional areas.
Jarden analysts described the result as “OK”, noting Coles’ Covid-related costs had begun to ease and were lower than Woolworths’ in the half year.
Ord Minnett said the result was modestly ahead of consensus due to better cost control.
Meanwhile, Ian Chitterer, vice-president of ratings agency Moody’s Investors Service, said the results were credit positive.
