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Coles lifts sales, keeps profit target
By Geoff Hiscock
SYDNEY, Australia (CNN) -- Australia's biggest retailer, Coles Myer, lifted sales 5.5 percent to Aust $13.8 billion ($8.1 billion) in its first half, and said Friday it was on track to meet its 2002-03 full-year earnings target. At its annual general meeting last November, the retailer said it would likely achieve a full-year net profit of A$425-$435 million. That is about 22-23 percent above the 2001-02 figure. Coles Myer, which had turnover of A$25.7 billion last financial year, accounts for about one in every five dollars of retail spending in Australia through its Coles and Bi-Lo supermarkets and its Kmart, Officeworks, Target and Myer Grace Bros stores. It has been battling with supermarket rival Woolworths in the key food and liquor markets and last year was looking to spin off under-performing units among its general merchandise stores. Any restructure on holdBut in October it said any restructure of the group was on hold until at least July this year. In December it bought most of the independent Theo's Liquor chain, lifting its liquor outlets to 591, compared with 438 outlets for Woolworths. (Full story) Coles Myer CEO John Fletcher said Friday that sales in the company's food and liquor division rose 5.3 percent in the half-year to the end of January in what he said was "an intensely competitive environment." Coles Myer and Woolworths between them dominate the grocery market, but are facing cut-price competitors such as Germany's Aldi supermarket chain. There are also reports that U.S. discount retailer Costco is looking at entering the Australian market. Fletcher said a turnaround at the Kmart and Target stores was accelerating and they were beginning to deliver "sustainable results." "Considering the state of these businesses only 18 months ago, this is a fantastic outcome," he said. Share price downTarget sales rose 8.6 percent in the first half, while Kmart and Officeworks combined sales were up 9.5 percent. But Myer Grace Bros and Megamart combined sales fell 1.3 percent. Shares in Coles Myer are down a third of a percent at A$5.95 in mid-morning trade Friday. The broader market, measured by the S&P/ASX200, is down 0.71 percent to 2,815.3. Coles Myer stock has fallen sharply in the past year, down more than 30 percent from A$8.80 in February 2002. Its share performance was hurt by missed profit forecasts in 2002 and a long-running boardroom battle that was finally resolved in November when dissident director Solomon Lew was voted off the board. (Full story) Lew, a former chairman of the company and its single biggest shareholder, was opposed by all but one other member of the board.
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