Shares in Australian grocer Coles jump on better-than-expected profit
By Echha Jain
(Reuters) -Australian grocer Coles Group (OTC:CLEGF) reported on Tuesday a 3.6% slide in half-year profit as stock losses and waste hit margins, but the result beat expectations and sent shares on track for their best session in nearly four years.
The company's net profit after tax from continuing operations was A$594 million ($388.36 million) for the six months ended Dec. 31, compared with A$616 million a year earlier, but beat a Jefferies estimate of A$557 million and a Jarden forecast of A$547 million.
Shares of Australia's second-biggest supermarket chain were trading 6.7% higher at A$16.94 as at 0015 GMT, after jumping as much as 7.1% earlier, posting their biggest intraday gain since March 2020 and hitting their highest level since August 2023.
Analysts at Citi said Coles' results were likely to be taken well in the context last week's worse-than-expected profit reported by rival Woolworths as well as Coles' recent share price underpeformance.
Coles said stock losses, waste and markdowns had presented margin headwinds in the first half, though that was expected to improve in the second half.
«Elevated theft rates are beginning to moderate as expected,» the Citi analysts said.
Coles' supermarkets division, its top money-making unit, reported revenue of A$19.78 billion, a 4.9% rise from the prior year.
The division also reported a 4.9% growth in sales revenue for the first eight weeks of the third quarter, which Citi said is «a very strong result» compared to Woolworths' Australian Food retail sales growth of 1.5% for the first seven weeks.
For now, Coles is managing to keep the balance between delivering continued growth and profitability with pressure to make consumers' life easier with lower
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