Investing.com - Coles Group Ltd (ASX:COL), the supermarket giant, has reported a modest rise in sales for the third quarter despite facing increasing scrutiny over allegations of price gouging.
The company unveiled its latest earnings on Tuesday, revealing a 3.4% increase in revenue from continuing operations compared to the same period last year, reaching $10bn in the March quarter.
The surge in revenue was largely driven by a 5.1% increase in supermarket sales, which amounted to $9.1bn. The company attributed this growth to robust sales of its exclusive food and grocery products.
Stay ahead of the curve with InvestingPro! Unlock access to AI-powered ProPicks, ProTips and more!
However, the overall result was slightly offset by a decline in the liquor division's turnover, which fell by 1.9% to $786 million. According to Coles' recent customer survey, 30% of its shoppers have reduced their liquor purchases due to the rising cost of living. Customers are opting for more affordable options, such as sparkling wine, over champagne and prosecco.
Excluding tobacco, overall supermarket inflation was down by 1.9% in the third quarter as prices began to ease. This disinflation was largely due to falling prices in the fresh food category, particularly apples and avocados. Consumers also benefited from lower meat prices, especially lamb. Despite these decreases, bakery inflation remained high due to the rising cost of wheat commodities, according to Coles.
Coles CEO Leah Weckert expressed satisfaction with the quarter's results, crediting the company's trade plans, focus on quality and value, and improved product availability.
The company's sales over the quarter were boosted by discounts offered during the Summer period, along with trade events around Australia Day and Valentine's Day. The timing of Easter also contributed to the strong turnover, with the long weekend falling entirely within the March quarter this year.
Coles' eCommerce sales experienced significant growth, rising by 34.9% to $856 million, supported by its Home Delivery and Click & Collect segments.
These results come at a time when Coles and its main competitor, Woolworths Ltd (ASX:WOW), are under intense scrutiny over allegations of unreasonable price inflation during the current inflation squeeze. These claims have sparked a series of federal and state inquiries into competition in the grocery sector, as well as reviews of the relationship between retailers and their suppliers.