The Coles Group Ltd (ASX: COL) share price will be one to watch closely this morning.
This follows the release of the supermarket operator’s third quarter update.
How is Coles performing?
As expected, due to the company cycling the panic buying one year ago at the height of the pandemic, Coles has reported a decline in quarterly sales.
According to the release, Coles recorded total sales of $8,758 million for the third quarter. This was down 5.1% from the prior corresponding period but up 7.2% from the same period in FY 2019.
Given that Goldman Sachs was forecasting total sales of $9,039.6 million for the period, this may not bode well for the Coles share price this morning.
How did its businesses perform?
The Supermarkets business was the main drag on its performance. Due to a 6.4% reduction in comparable sales, this segment recorded a 6.1% decline in sales to $7,724 million.
Positively, its Liquor and Express businesses continue to grow their sales. This was due partly to COVID-19 not boosting their sales until much later in the third quarter of FY 2020.
The Liquor business reported a 2.1% increase in comparable sales, underpinning a 2.6% lift in quarterly sales to $759 million.
Whereas its Express business delivered a 6.3% increase in comparable sales, leading to a 7.4% jump in sales to $275 million.
One thing that may bode well for the Coles share price today is an update on its fourth quarter performance.
The release explains that during the first four weeks of the fourth quarter, Supermarkets sales, adjusted for ANZAC Day timing, increased by approximately 4% on the prior corresponding period and 8% on a two-year basis.
Management also notes that early signs of normalising consumer behaviour were observed. These include improved transaction growth, a recovery of COVID-19 impacted categories, Sunday returning to be the busiest trading day of the week, and positive indicators of the unwind of ‘local shopping’ as customers returned to shopping centres and CBD stores.
No guidance has been given for the quarter or full year result.
The Coles share price is down 15.5% since the start of the year. Shareholders will no doubt be hoping its recovery begins today.