Early on Tuesday morning, mega supermarket chain and household name Coles Group [ASX:COL] reported its earnings for the half year 2023.
The group revealed operations had returned a 3.9% uplift to sales revenue growth for the half year, bolstering dividends by 9%.
COL was trading mostly flat after the flurry of financial announcements, including naming its new CEO to take up the helm in May.
The COL share price was boosted more than 7% in the last month, tracking at a 10% uptick for the year, a little ahead of Woolworths Group [ASX:WOW], who has yet to publish its half-year results.
Source: tradingview.com
Coles Group ups dividends thanks to higher profits
Coles reported $20.8 billion in total sales, and EBIT from continuing operations also increased to $1.1 billion.
This was thanks to a newfound balance post-COVID, cost-saving strategies put into place by the group’s ‘smarter selling benefits’, reducing COVID-linked costs year-on-year.
The group’s gross margin of 26.5% had also increased by 43 bps year-on-year due to these strategies, tactical sourcing, and a good product mix.
Cost of doing business as a percentage of sales increased by 15 bps to 21.2% due to rising inflation and investments made in digital and eCommerce.
With profit scaling up 17.1% to $643 million, Coles’ board declared interim dividends of 36 cents a share, fully franked, representing a 9.1% increase in comparison with the first half of 2022.
Earnings per share had also increased by 11%, going from 41.5 cents a share in the first half of 2022 to 46.3 cents.
Coles said that its three-year headline sales growth had increased by 13.6% for its supermarket segment and even higher in liquor by 15.4%.
The group seeing comparable sales growth post-pandemic limitations, sales climbed 7.4% in supermarkets since the second quarter, though much less in liquor, which was mostly flat.
Ongoing and upcoming changes for COL
During the half, Coles completed 15 lease renewals, opened 10 new stores, and closed three, taking the total network to 842 supermarkets across Australia.
Its sale of Coles Express to Viva Energy is also expected to take effect in the fourth quarter.
The company said supermarket volume growth returned to a modest rate from mid-January, yet supplier input cost pressures remain, particularly for packaged goods, wages, and energy.
Coles expects inflation to moderate from the peak levels seen in the second quarter; however, in the meantime, customers will remain value conscious as cost-of-living pressures increase.
CEO Steven Cain is also set to retire and will be replaced by Leah Weckert, to take effect on 1 May 2023.
James Graham, Chairman of Coles, said of the incoming CEO:
‘Leah has an outstanding track record of leadership and driving change inside Coles across key operating areas of the business.
‘I am confident that Leah will maintain the focus of Coles in driving our strategy, building trust with all stakeholders and growing long term shareholder value.’
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Regards,
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For Money Morning
