(Adds milestones in lede, 3rd paragraph, updates shares)
By Byron Kaye
SYDNEY, April 28 (Reuters) - Australian grocery chain Coles Group Ltd COL.AX on Wednesday declared the end of supermarket panic buying a year after the country went into lockdown over the COVID-19 pandemic, as it reported its first quarterly sales decline in over a decade.
Supermarkets were among Australia's sharemarket outperformers in early 2020 when stay-home orders sent shoppers into a buying frenzy, but have since lost appeal as the country brought the pandemic under control. said supermarket sales fell 6.4% to A$7.7 billion ($6 billion) in the three months to end-March, down from a record quarter in the same period a year earlier.
As recently as Feb. 17, midway through the most recent quarter, Australia's No. 2 grocer said sales were tracking up 3.3%, indicating an abrupt change of shopping behaviour between then and March 28. the first time we've really seen any evidence that the local shopping phenomenon, which is the biggest phenomenon that we've seen during COVID, is beginning to unwind," said Coles CEO Steven Cain on an analyst call.
Coles CBD stores, which went quiet through 2020 as workers stayed away from offices and shopped closer to home, were increasing trade and customers were visiting supermarkets more often, Cain added.
Supermarkets inside malls, which also experienced sales declines in periods of restricted movement, were drawing customers again.
Coles shares were up 1.2% by midsession, better than a 0.5% gain on the broader market .AXJO , as investors hoped for a benefit from a return to CBD shopping and looked to longer-term comparisons beyond the disruption of COVID.
"There appears to be some benefit from a return to malls and CBDs, which should assist COL," Jeffries analysts said in a client note.
"While the headline growth rate will likely slow ... the two-year growth rate points to an underlying improvement," they added, noting the Coles figures showed a 6.7% increase in supermarket sales since the same quarter two years earlier.
Larger rival Woolworths Group Ltd WOW.AX is expected to give a sales update on Thursday.
($1 = 1.2932 Australian dollars)