Coles has reported its results for financial year 2022 (FY22), with strong results for its liquor business with sales revenue increasing 2.5 per cent to $3.6bn, but its sales revenue over the last years has seen impressive growth of 18 per cent.
Overall the group reported sales revenue $39.4bn and group EBIT of $1.9bn.
In the liquor business sales were elevated in the first half as on-premise venues in New South Wales, Australian Capital Territory and Victoria were closed. However the group said that COVID-19 sales impacts tapered over the year as restrictions eased and venues re-opened. Liquor stores were also disrupted due to the flood events in February with 66 Liquor stores initially impacted with seven stores remaining closed at the end of the year.
Coles reported: “The Christmas and Easter trading periods were strong. Liquorland was the strongest performing banner with 191 Black and White Liquorland renewals completed, providing customers with an enhanced range of local wines, craft beers and boutique spirits. At a category level, Ready-To-Drink and Spirits were the key drivers of growth.
“eCommerce sales grew by 49 per cent with penetration of 4.6 per cent in FY22, compared to 3.1 per cent in the prior corresponding period. During the year, capacity was increased through the continued roll out of Click & Collect, the expansion of on demand (immediacy delivery) which is available in more than 400 stores, while 1400 products were added to the online range.
“During the year, in order to achieve its vision of becoming ‘a simpler, more accessible and locally relevant drinks specialist’, the strategic focus shifted to the ‘differentiate and grow’ phase of Liquor’s strategy (from ‘simplify and refocus’). This will further enable Liquor to differentiate and serve customers better, grow the exclusive liquor brand range and continue to build relationships with local suppliers across all channels and formats.
“Liquor will also focus on its eCommerce offering, including via Ocado, the renewal program, evolve its formats and optimise the network. Investments will continue in customer service, delivering trusted value and core IT systems.
“Liquor completed 208 store renewals during the year including nine Vintage Cellar Evolution stores, in addition to the 191 Black & White Liquorland renewals. For the year, 16 new openings and 12 closures were completed. At the end of the period there were 933 Liquor stores.”
Speaking on the group’s overall performance, CEO Steven Cain said: “We have now delivered the third year of our transformation strategy, including significant growth in our eCommerce operations, coupled with additional efficiencies from our Smarter Selling program. We continue to focus on delivery of our vision to be the most trusted retailer in Australia and grow long-term shareholder value.
“I want to acknowledge the hard work of our team members, suppliers and community partners who have done an outstanding job in overcoming significant supply chain challenges including managing the impact of flooding on product availability, as well as continuing to support each other through elevated COVID-19 and flu cases which have resulted in higher levels of absenteeism. It is encouraging to see that domestic product availability is steadily improving whilst the international supply chain remains more volatile due to the ongoing shipping disruptions and the conflict in Ukraine.
“With Australian families facing increased pressure on household budgets, our commitment to delivering trusted value remains more important than ever. As examples, we are beginning to see our customers buying significantly more $1 Coles pasta and our $1 coffee at Coles Express has never been more popular.
“The ongoing headwind of rising cost inflation further underscores the importance of our Smarter Selling program. The commissioning commencement of three of our four automated distribution centres and online customer fulfilment centres in 2023 will also allow us to drive future efficiencies while delivering an enhanced offer to inspire customers.”
Coles Group Chairman, James Graham added: “This year reflected significant progress across all areas of the business and the critical role of investment in new technology and new systems to underpin long-term performance. The need for the Group to evaluate and respond quickly to a changing operating environment has never been more important as we focus on ensuring value for customers in an inflationary environment.”
Looking ahead the group said it expects liquor sales growth to be impacted by the cycling of COVID-19 lockdowns in the first half of FY22, adding that FY23 will be “another year of significant investment for Coles” as it commits to “transformational projects” designed to improve customer experience and efficiency.