1H20 Trading Update - 27 Weeks from 1 July 2019 to 5 January 2020

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    Coles Group Limited (Coles, ASX: COL) is today providing a trading update ahead of its 2020
    Half Year Results announcement. The trading update is a provisional result based on
    management accounts and is subject to finalisation and audit review. Coles has previously
    advised that it is transitioning to a retail reporting calendar reflecting 27 weeks in the first half
    which in the 2020 financial year ended on 5 January 2020, the prior corresponding period
    ended on 30 December 2018.
    In its 2020 first quarter sales results on 29 October 2019, Coles reported that in the early part of
    the second quarter, Supermarkets comparable sales growth had trended towards the level
    achieved in the fourth quarter of the 2019 financial year. However, the success of the Christmas
    campaign exceeded expectations with Supermarkets delivering comparable sales growth of
    3.6% in the second quarter1
    and 2.0% for the first half1. Comparable sales growth in Liquor and
    Express (c-store) were 2.1% and 5.1% respectively for the second quarter and 1.5% and 2.9%
    respectively for the first half.
    Coles’ provisional first half FY20 Group EBIT (pre the application of AASB16, on a retail calendar
    basis) is expected to be between $710 million and $730 million. The first half provisional EBIT
    result was impacted by the following favourable timing and non-operating items to be
    reported in ‘Other’:
     A $15 million self-insurance release of the workers compensation provision largely as a
    result of improved safety performance; and
     Earnings from property operations of $33 million, including net gains from property
    disposals which represent the vast majority of the expected FY20 property earnings.
    Supermarkets EBIT growth in the first half of FY20 benefited from incremental costs incurred in
    the first half of FY19 relating to the removal of plastic bags and increased flybuys promotions,
    which were not repeated in the first half of FY20. The cycling of these prior year incremental
    costs is not expected to reoccur in the second half of FY20.
    Despite a satisfactory outcome on sales, Liquor EBIT in the first half of FY20 was down on the
    prior corresponding period as a result of margin pressure and was impacted by clearance and
    promotional activity following the commencement of strategic range reviews.
    Further detail and trading outlook will be provided at Coles’ interim results for the 2020 financial
    year on Tuesday, 18 February 2020.

    courtesy of Bell Direct

    ( DYOR )

    i hold COL ( courtesy of the WES spin-off )

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