Rising meat prices still front of mind, as Woolies and Coles deliver stronger first quarter results

BOTH Coles and Woolworths first quarter financial results released this week remark on the price inflationary trend in fresh meat.

In its results announced yesterday Coles delivered the better of the two major retailer rivals’ sales growth results for the quarter ended 30, reporting supermarket revenue of $9.96 billion, up 4.8pc year on year.

Woolworths’ equivalent result for Australian food sales saw revenue reach $13.887 billion, up 2.1pc (retail food sales +3.8pc) on the same time last year. The company described the sales performance as “below our aspirations.”

Both Coles and Woolworths singled-out fresh meat for mention.

While Coles supermarket price inflation in overall fresh produce eased, largely a result of abundant supply across fruit and vegetable categories, inflation in fresh meat increased, Coles reported to shareholders.

“In red meat, beef and lamb livestock cost of goods have been increasing ahead of shelf price inflation, as we invest to reduce the impact for customers,” Coles Group chief executive Leah Weckert said.We continue to see a dynamic competitive market and are tailoring our pricing architecture in certain categories to cater for the changing landscape, including expanding the number of products within our Everyday Low Price range,” Ms Weckert said.

Coles had launched hundreds of new products across its supermarkets last quarter, including popular innovations such as the Grill’d beef burger pattie retail range (pictured left).

Coles eCommerce sales (online purchasing) momentum continued through the quarter, with sales revenue increased by 27.9pc compared with the same quarter last year, with penetration (the proportion of overall customers using the online buying portal) increasing to 13.3pc.

“The supermarket retail market continues to be competitive, and as we enter the festive season, we are focused on providing inspiration for entertaining at home and delivering value to ensure our customers can make the most of every dollar they spend,” Ms Weckert said.

Woolworths lags in sales growth
Major national retail competitor Woolworths announced first quarter results on Wednesday, with Australian supermarket sales reaching $13.887 billion, up 2.1pc (retail food sales +3.8pc) on the same time last year.

Woolworths Group CEO, Amanda Bardwell, said food price inflation reduced over the quarter, which led to a softening in total sales in the latter part of the reporting period – however unit growth showed a modest improvement.

“The lower inflation was primarily due to Fruit & Vegetables moving into deflation, driven by increased supply. This was partially offset by higher fresh meat prices,” Ms Bardwell said.

Fresh foods sales growth for the quarter was driven by chilled meat and fruit, with fresh sales growing faster than the Long Life segment, she said.

In eCommerce online retail, Woolworths’ sales grew by 12.9pc year-on-year.

“Looking ahead, we are cautiously optimistic about our key trading quarter heading into Christmas, and we have strong plans in place for our customers for the festive season including a refreshed seasonal range.

“Woolworths food retail sales in the current second quarter ending 31 December to date have increased by 5pc (excluding tobacco) as we continue our focus on rebuilding momentum.

“It will take some time for the full benefits of our strategic actions to be realised but we remain confident the steps we are taking will lead to meaningful improvements for our customers and our shareholders,” Ms Bardwell said.