Coles Myer revamp off to strong start
Recovery programme starts to bite at Australian retailer
November 26 2003
Cole Myer has is forecasting a bumper year for sales after the recovery programme implemented by Australia’s biggest retail group started to bite.
With group sales in the second quarter to last weekend up by 12.1 per cent, Coles Myer is forecasting that underlying full year earnings for the current financial year will rise by 20-23 per cent to $548m-$558m.
Chief executive John Fletcher said that after the cost of a group supply chain revamp announced in September, this would mean earnings of $520m to $530m, in line with market expectations, subject to good Christmas trading.
In Food & Liquor, where the group operates chains including Coles and Bi-Lo, the company said comparative store sales are strengthening, a trend expected to continue as the Coles Express fuel offer is rolled out.
Fletcher said: “It has been a good start to the year.” With underlying performance now clearly improving, Coles Myer said it is in a position to reinvest in the business. The five-year plan to transform Coles Myer’s information technology systems and supply chain will incur costs in the early stages to realise benefits later in the process.
Fletecher said: “We have previously flagged to the market a net annual cost of $40m before tax for the initial stage of the supply chain transformation, the very significant benefits from which will flow in future years.
“Having said that, we are committed to delivering significant annual earnings improvement even after the $40m before tax. We are committed to unlocking the full potential of our combined businesses for our customers and for you, our shareholders, for the first time in Coles Myer’s history.”
