The Coles Group Ltd (ASX: COL) share price is moving higher this morning after the blue-chip company reported its full-year earnings for FY21. Following its latest results, investors are bidding up shares in Australia’s retailing giant.
Coles share price climbs after solid result
- Sales revenue increased 3.1% to $38,562 million
- Earnings before interest, tax, depreciation, and amortisation (EBITDA) up 5.4% to $3,432 million
- Net profit after tax up 7.5% to $1,005 million (compared to consensus estimates of $998.2 million)
- Fully franked final dividend of 28 cents per share. Resulting in a record total dividend of 61 cents per share, up 6.1% from FY20.
What happened in FY21 for Coles Group
During the 12 months ending 27 June 2021, Coles Group delivered a solid performance despite continued disruptions. Year-over-year growth across the company’s revenue and earnings might be positive for the Coles share price today.
According to the release, Coles achieved a 3.1% increase in sales revenue to $38,562 million in FY21. This was supported by unwinding in local shopping and continued strength in Cole’s eCommerce segment. In fact, the financial period saw eCommerce sales contribute $2 billion in revenue. Positively for the Coles share price, this represented a significant increase of 52% on the prior year as more shoppers resort to online purchasing during lockdowns.
Meanwhile, the Coles liquor division also benefitted from the eCommerce shift. Liquor revenue increased 6.6% year-over-year to $3,525 million. Despite easing on-premise consumption restrictions, more consumers opted to purchase online with larger orders. This also followed Coles’ refreshed liquor strategy of being a simpler, more accessible, locally relevant drinks specialist.
Moving to the bottom line, Coles’ net profit after tax rose 2.8% to $1,005 million in FY21. The retailing giant combatted a challenging period by implementing ‘Smarter Selling’ benefits during the year. During FY21, Coles achieved $300 million in benefits by leveraging data and technology.
As a result, the board declared a fully franked final dividend of 28 cents per share. The dividend’s record date will be 27 August 2021, with payment made on 28 September 2021. Based on the current Coles share price, the total year’s dividend represents a yield of ~3.29%.
What did management say?
Commenting on the result, Coles Group Chairman James Graham said:
The result highlights the commitment of the Group to grow trust and shareholder value in a year marked by extraordinary community and business challenges. Pleasingly, significant progress has been made in the development of new operating systems and the investment in new technology platforms which will further strengthen our long-term performance.
Further to this, Coles Chief Executive Officer Mr Steven Cain said:
Whilst the COVID-19 Delta variant is presenting some new challenges, I would like to thank all levels of government for continuing to work with us to help keep our customers, team members and the community safe, including by providing priority access to vaccines in some critical areas. In February, we said the short-term outlook would be dependent upon the efficacy and pace of the vaccination program. Six months on, government forecasts are pointing to a more normal outlook from early in calendar 2022 including the longer-term prospect of increased migration.
What’s next for Coles?
Looking ahead, Coles noted the early part of the first quarter has remained volatile as COVID-19 outbreaks continue to result in lockdowns. As snap lockdowns increased, local shopping trends have re-emerged, which is not so positive for the Coles share price. However, the company expects a normalisation in consumer behaviour in 2022 due to the vaccination rollout.
Furthermore, FY22 is slated to be a year of expenditure. Coles plans on committing $290 million during the financial year for its Queensland facility. In addition, various other facilities across the country will have money spent on them to drive growth and efficiencies.
Coles share price recap
The Coles Group share price fell 1% over the past year. In contrast, the S&P/ASX 200 Index (ASX: XJO) climbed 22.7%. Although, in the past 6 months Coles has been on a positive trajectory — gaining nearly 14%.