(Corrects paragraph 11 to say three-month period ended September 27, not September 30; drop repeated word from paragraph 1)
Oct 30 (Reuters) – Australia’s Coles said on Friday that heightened promotional activity by competitors hurt early second-quarter sales, as cost-conscious shoppers sought bargains, sending its shares to a more than five-month low.
The stock fell as much as 12.8% to A$20.47 by 2353 GMT, marking their worst intraday session and was among the worst performer in the broader S&P/ASX 200 index, which rose 0.7%.
The country’s second-largest grocer said shoppers continued to compare prices across retailers and channels, while making greater use of promotions and loyalty programmes to manage household budgets.
Supermarket sales growth slowed in the first four weeks of the second quarter from 3.6% in the first quarter, missing a Visible Alpha consensus forecast of 5% for second quarter.
Coles said it was taking “deliberate actions to strengthen momentum”, including relaunching its Every Day Price programme, which locks in lower prices on selected products for at least six months, to attract value-focused shoppers.
Coles also launched its exclusive Christmas range, featuring products available only through its supermarkets.
First-quarter sales revenue at the supermarkets division rose 3.6% to A$10.32 billion, slightly below the Visible Alpha consensus estimate of A$10.39 billion.
Jefferies said in a note that Coles’ supermarket sales growth lagged rival Woolworths’ 6.1% growth and its 6.9% increase in total sales, suggesting the grocer continued to lose market share following Woolworths’ Ooshies campaign.
The company also flagged higher fuel-related costs in the first half due to increased fuel prices over the past two months and expects first-half supermarket EBIT to be in line with the prior corresponding period.
The decline in liquor sales revenue in the early part of the second quarter was broadly in line with the first quarter drop of 1.3%, it added.
Coles reported total group sales revenue of A$11.21 billion ($7.88 billion) for the three-month period ended September 27, missing Visible Alpha’s estimate of A$11.31 billion. Sales were at A$10.96 billion a year earlier.
($1 = 1.4221 Australian dollars)
(Reporting by Sherin Sunny and and Shruti Agarwal in Bengaluru; Editing by Shreya Biswas and Sherry Jacob-Phillips)
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