The Coles Group Ltd (ASX: COL) share price will be one to watch this morning after the supermarket giant released its third quarter sales update.
Here's how Coles performed during the 12 weeks to March 24 compared to the prior corresponding period:
- Supermarkets sales grew 3.2% to $7,272 million.
- Liquor sales increased 4.3% to $735 million.
- Total Supermarket and Liquor sales up 3.3% to $8,007 million.
- Express sales down 32% to $874 million due to transitioning to the New Alliance Agreement which excludes fuel sales revenue post March 1.
- Total third quarter sales down 1.8% to $8,881 million.
The key driver of its strong quarter was its Supermarkets business. Total supermarket sales grew 3.2% in the third quarter or 2.4% on a comparable sales basis thanks partly to a successful 'Fresh Stikeez' promotional campaign which drove high customer engagement.
Coles also reported strong growth in average basket size once again during the quarter, largely underpinned by items per basket growth and price inflation in fresh categories.
In addition to this, Coles Online grew 27% during the quarter and now has sales of over $1 billion on a rolling 12-month basis.
Also performing well was the Liquor business which benefited from the strong growth in Exclusive Liquor Brands in the wine category. Comparable sales grew 3.5% during the quarter or 0.9% when adjusting for the timing of New Year's Eve.
Coles Group's CEO, Steven Cain, appeared to be pleased with the company's performance in the third quarter.
He said: "We delivered a solid outcome for the third quarter. We know that customer expectations are changing faster than ever, and we are resolutely focused on delivering our Fresh Tomorrow strategy. We were also pleased to provide support for communities impacted by natural disasters such as floods in Far North Queensland, bushfires in Tasmania and Victoria, and Cyclone Veronica in WA."
Should you invest?
Overall, I thought this was a strong quarter for Coles and continue to believe it would be a good option for investors along with former parent Wesfarmers Ltd (ASX: WES). Furthermore, I would choose them both over rival Woolworths Group Ltd (ASX: WOW) on valuation grounds right now.
