Australian retailers fight it out over fuel
Woolworths reports record profits as Cole Myer recovery continues
August 25 2003
Supermarket sales linked to fuel are proving to be a fierce battleground for two of Australia’s major retail groups, Woolworths and Cole Myer.
Woolworths has announced a 15,6 per cent rise in annual net profits to A$650.6 million, and is rolling out almost 50 new supermarkets, discount and liquor stores this year to add to existing total of 1,145.
Woolworths has also launches a joint fuel venture with Caltex Australia, designed to counter the recent partnership between Coles Myer and Royal Dutch/Shell Group. Fuel sales are key to the success of supermarkets in many part of Australia, and the Woolworths/Caltex joint venture will see petrol stations set up at 450 Woolworths, Safeway and Big W stores – all fascias operated by Woolworths Australia.
Woolworths chief executive Roger Corbett said: “Our single objective in petrol has always been to have a nationwide network providing quality petrol at a discount to our customers, where they shop.”
On the latest results, he said: “We have continued to achieve excellent sales and profit growth in a competitive market.”
Woolworths still has relatively low share of the grocery market in Australia, and Corbett said the company will look at small acquisitions, and may consider bigger deals in the future.
Meanwhile, Coles Myer chief executive officer John Fletcher said his business was concentrating on organic growth rather than acquisition. Coles Myer is planning to open between 30 and 35 new supermarkets a year, with former Asda executive Steven Cain taking over the supermarket division in October.
Having announced a 7.4 per cent increase in fourth quarter sales to A$6.7bn, he said the group’s recovery programme is starting to have an impact. Fletcher said: “I think what we’re starting to see is what happens when you get a quality team of retailers with their feet under the table long enough to make a difference.”
Fletcher said is was too early to comment on the success of Coles Myer’s own discount fuel alliance with Royal Dutch/Shell. He said the initial launch had gone smoothly, “but this is just the third week in of a new business for us and it’s just way too early to be drawing any conclusions. Suffice to say we are pleased with the customer response we are getting in the supermarkets.”
