Australia: Coles Myer sales hit $ 9 bln

Retailer Coles Myer said its first quarter sales were up 5.6% to $9 billion, even though retail conditions have been tough. Coles Myer said it remains on track to reach its 2005/06 earnings target of $800 million before capital management. At the same time, Coles Myer said that about 20 parties had sought the information memorandum on the Myer department store operations and have until early December to submit bids.

"We are pleased with the progress made in the toughest conditions experienced for some time across the retail sector," Coles Myer chief executive John Fletcher said. "Coles Myer remains on track despite the challenging conditions. "We remain committed to achieving our FY2006 earnings target of $769 million ($800 million pre-capital management)."

Mr Fletcher said comparative store sales in food and liquor were in line with expectations while the non-food operations continued to grow, with the exception of Kmart, which was hit by fuel prices and lower consumer sentiment. Mr Fletcher said that the submissions to be received on Myer would assist the board in its decision, adding that it will also consider the possibility of redeveloping the landmark Melbourne Myer store.

Coles Myer said food and liquor sales rose 4.4 per cent in the quarter, with comparative sales growth up 2.1 per cent. Thirteen new supermarkets were opened in the quarter, while the rollout of the 1st Choice Liquor Superstore brand continued. An additional 14 new supermarkets and 13 1st Choice stores are expected to be opened by the end of 2005/06.

Coles Myer also said food inflation increased 1.8 per cent over the 13 weeks to October 30, 2005 due to higher fresh food prices. Coles Express sales rose 18.1 per cent despite volumes remaining stable as record fuel prices boosted revenue. Kmart sales declined 1.4 per cent in the quarter, with comparative store sales down 3.3 per cent.

"Kmart's core customer within the family segment was impacted by the higher fuel prices, translating into slower sales, with home and entertainment categories most affected," Coles Myer said. Myer sales rose 2.4 per cent in the quarter with increases across key categories as it focuses on the Christmas trading season.

Coles myer also said Megamart stores would cease trading from November 13, inline with the announcement yesterday of Harvey Norman (hvn.ASX:Quote,News) taking over the leases of six of the nine Megamart stores and rebrand them as Harvey Norman stores. The remaining three stores will close.

Target sales rose three per cnet in the quarter, with comparative sales up 1.1 per cent with footwear a key growth area, although sales were impacted by the pull forward of one week of the Toy Sale into 2004/05. Officeworks achieved sales growth of 4.3 per cent in the quarter with the restructure of Harris Technologies resulting in flat comparative store sales for the combined operations.

Source