By James Atkinson

Coles managing director Ian McLeod says he is encouraged by the improved profitability of the retailer's liquor division, despite it showing slower sales growth than that of the food business last year.

Parent company Wesfarmers yesterday announced its annual results for the year ended June 30, with analysts zeroing in on the chequered performance of Coles' retail siblings Bunnings and Target.

The liquor division's new strategy that was announced to suppliers in recent weeks did not rate a mention.  

But McLeod said liquor rallied over the period, driven by a more profitable sales mix, stronger promotions, and better customer communication.

"The store network restructure we have worked on over the last five years is well-advanced," he added. 

"We now have a much stronger mix of co-located stores which generally perform better than free-standing stores. The free-standing stores that remain are better positioned in higher traffic areas."

Coles' headline food and liquor sales of $28.1 billion were 5.5 per cent above the previous corresponding period, with comparable store sales increasing 4.3 per cent. 

For the fourth quarter, total food and liquor sales were $7.3 billion, an increase of 5.7 per cent on last year, with comparable store sales increasing 4.5 per cent. 

Coles opened 46 stores over the year, which included 10 1st Choice stores and 29 Liquorland stores co-located with a supermarket, while 28 underperforming stores were closed.

"Of course much work needs to be done but good progress has been made throughout the year," McLeod said.

The Shout Team

The leading online news service for Australia's beer, wine, spirits and hospitality industries.

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