TLDR: Coles’ Q1 sales were up 3.5%, driven by value campaigns, exclusive products, and strong eCommerce performance. The company is focused on helping customers navigate cost-of-living pressures while investing in future growth with new automated distribution centres.
Solid Start to FY25: Sales and Strategy in Action
Coles Group has posted strong results for the first quarter of FY25, with total supermarket sales revenue hitting $9.5 billion, a 3.5% increase compared to the same time last year. Notably, sales growth was underpinned by Coles’ focus on offering value to customers during a period of high cost-of-living pressures. Through initiatives like value campaigns, special promotions, and exclusive brands, Coles has managed to keep customers engaged and help them save on their grocery bills.
Leah Weckert, Coles Group CEO, highlighted the ongoing challenges of the cost of living, but reassured customers that Coles is committed to delivering value through weekly specials, exclusive brands like Coles Simply and Coles Finest, and rewards through the Flybuys loyalty program.
What’s Driving Sales Growth?
- Value Campaigns & Exclusive Brands
A significant part of the sales increase came from Coles’ Winter and Spring value campaigns, designed to help families save on essential items. Coles also launched 108 new Exclusive to Coles products, expanding their range to meet customer demand for quality and affordable options. Notably, Coles Finest, which caters to customers looking to treat themselves, saw a revenue growth of 8.9%. - Flybuys and eCommerce
The Flybuys program continued to be a major success, with a 4.1% increase in active members and a 21.3% growth in personalized offers. eCommerce also saw impressive growth, with sales increasing by 22.4%, now making up 10.8% of Coles’ total supermarket sales. This boost was supported by improvements to the Coles app, personalized offers, and the integration of taste.com.au recipes, making online shopping even easier for customers.
Operational Progress: Automation and Home Delivery
One of Coles’ key focus areas for the quarter was the ramp-up of its new Automated Distribution Centre (ADC) in New South Wales, which is progressing well. These centres are designed to increase supply chain efficiency, reduce costs, and improve product availability. Early signs are positive, with a marked improvement in perfect order rates from next-day home delivery services, thanks to the newly established Customer Fulfilment Centres (CFCs) in Melbourne and Sydney.
The company is continuing its focus on automation to ensure its supply chain is future-proof and ready to meet customer demand, especially with the busy holiday season approaching.
Challenges and Looking Ahead
Despite the strong performance, Coles did face some challenges, particularly in the egg category, where avian influenza impacted supply. However, this was largely offset by the growth in other categories, especially meat, dairy, homecare, and health & beauty, all of which were in deflation for the quarter, helping to keep prices down.
Looking ahead, Coles is optimistic about continuing to drive growth into the second quarter, especially with the upcoming festive season. They are also investing heavily in new projects, including the construction of a third ADC in Truganina, Victoria, which is expected to further enhance efficiency and product availability across the business.
A Focus on Value and Long-Term Growth
In her statement, CEO Leah Weckert emphasized that Coles will keep working to deliver value to Australian families while also preparing for future growth. By investing in automation and expanding their network of distribution centres, Coles is setting itself up for continued success in both the short and long term.
Final Thoughts: Strong Foundations for the Future
Coles’ Q1 results show that the company is adapting well to current market conditions while positioning itself for future growth. Their strategy of combining value-driven initiatives with cutting-edge technology will likely continue to resonate with both customers and investors alike. With a solid foundation built on customer loyalty, innovation, and operational efficiency, Coles appears to be well-prepared for the challenges and opportunities that lie ahead.
