The Coles Group Ltd (ASX: COL) share price is sliding lower despite the supermarket giant's CEO and managing director Steven Cain heralding brighter days for the business.
Speaking to shareholders at the Coles annual general meeting (AGM), Cain said the pandemic ultimately helped strengthen the company, touting "the best is still to come".
He also said 'local shopping' trends, driven by floods and COVID-19 restrictions, were unwinding to Coles' benefit, with Aussies instead seeking out value amid the inflationary environment.
The Coles share price is down 0.42% this afternoon, trading at $16.52.
For comparison, the S&P/ASX 200 Index (ASX: XJO) has lifted 0.62% at the time of writing. Meanwhile, the S&P/ASX 200 Consumer Staples Index (ASX: XSJ) has slumped 0.25%.
Let's take a closer look at what went down at the company's 2022 AGM.
Image source: Getty Images
Coles share price slides following AGM
The financial year 2022 was challenging for Coles, but the supermarket operator pushed through relatively unscathed, as its management pointed out at this year's AGM. Speaking at the meeting, Cain said:
Coles is now a better business than before COVID, we are more resilient, more agile, and now classified as essential!
We are making significant progress on our strategy and our increased investment in the business. The good news is the best is still to come.
The company bore $240 million of COVID-specific costs last fiscal year. However, it managed to post comparable year-on-year earnings before interest and tax. And it wasn't just the pandemic that posed a challenge.
Floods in New South Wales, Queensland, and South Australia earlier this year hampered supply chains nationwide. Additionally, inflation has taken its toll on many of the company's suppliers. Coles chair James Graham commented today:
In somewhat challenging circumstances our suppliers worked collaboratively with us [last financial year] to overcome availability constraints and we have responded to many requests for cost price increases where there were clear signs that raw material and/or operating costs had also increased.
These challenges in both availability and cost pressures have continued into our new financial year where we have seen an increase in the effects of inflation.
Also potentially disappointing is that Coles' long-term soft plastic recycling partner REDcycle has paused its soft plastics collection.
Cain said sustainability was important to Coles and it's exploring options for a sustainable, long-term structural solution for soft plastic recycling.
Looking ahead
Looking to the future, the company is developing two distribution centre automation projects, with the commissioning of a Queensland facility expected in the first quarter of 2023 and a NSW facility in early 2024. It's also developing customer fulfilment centres in Victoria and NSW.
Coles now expects to benefit from an increasing net new store opening profile and an expected increase in skilled migration as processing times for Australian visas decrease.
It's also expecting to sell Coles Express to Viva Energy Group Ltd (ASX: VEA) next year, as announced in September.
Coles share price snapshot
The Coles share price hasn't managed to dodge the 2022 downturn, falling 7.7% so far this year. It's also dropped 6.6% since this time last year.
Meanwhile, the ASX 200 has also fallen 7.7% year to date and 5.7% over the last 12 months.
