Coles Liquor felt the impact of floods and rising Omicron cases in the third quarter, however sales revenue was up 2.9% to $781 million, with growth across all states.

Group gross retail sales of $9.3 billion increased by 3.9% and group sales revenue of $9.1 billion increased by 3.6%. Coles said the third quarter was characterised by unprecedented events including:

• High COVID-19 Omicron cases in January resulted in increased absenteeism with a significant number of Coles and supplier team members required to isolate. This led to availability challenges and short-term impacts on Coles’ promotional program and disruptions to stores and distribution centres;

• Floods in South Australia caused severe road and rail logistic disruptions into Western Australia and the Northern Territory, in particular the East-West rail network with the single train-line into both states closed for four weeks;

• Floods in NSW and Queensland saw 130 stores temporarily close across the Supermarkets, Liquor and the Express network. Twelve stores remained closed at the end of the third quarter; and

• Cost price inflation impacting suppliers as a result of increased raw material, commodity, shipping and fuel costs.

Local shopping trends re-emerged with the contribution from neighbourhood stores greater, as compared to shopping centres and CBD stores, in the third quarter compared to the second quarter. In addition, COVID-19 driven availability issues in store also resulted in customers shopping in their local store network including specialist retailers, as opposed to COVID-19 travel restrictions that drove local shopping trends in the past.

Coles Group CEO Steven Cain said: “Coles Group remains focused on our commitment to deliver trusted value for Australian families amid growing cost of living pressures driven by both local and global supply circumstances.

“I want to thank our team members and suppliers for their continued hard work during the quarter to provide the best offer possible despite the impact of widespread flooding and record COVID-19 numbers. I would also like to thank our customers, community partners and state and federal governments for their help and generosity in supporting Coles’ efforts to assist communities impacted by flooding during the quarter.”

Floods close 66 Coles Liquor stores

Coles Liquor sales revenue increased despite the impact of the significant flood events. The company noted that rising Omicron cases in the early part of the quarter also limited social gatherings and associated liquor consumption.

Significant flood events resulted in 66 liquor stores being temporarily closed, while seven stores remained closed at the end of the quarter.

Rising Omicron cases through the early part of the quarter limited social gatherings and associated liquor consumption with Coles reporting customers preferring larger pack sizes. Sales growth was driven by eCommerce and Liquorland, which continued to be the strongest performing banner.

At the category level, RTDs and spirits continue to be the key drivers of growth.

Prior strategic investments in eCommerce supported sales growth of 50% and penetration of 4.3%. Further enhancements to the eCommerce customer experience were implemented during the quarter, including the introduction of live chat customer service functionality on each banner’s website.

The Vintage Cellars loyalty program was re-launched during the quarter, now known as ‘VC Club’. Coles reported that VC Club has “seen strong new member sign-ups and increased scan rates” since re-launch of the program in March.

In the fourth quarter to date, Coles said it has recorded a solid trading period with no COVID-19 related restrictions on traditional family events such as Easter.

“We continue to manage the ongoing impacts from the highly disruptive events from the third quarter, pleasingly availability continues to improve as the supply chain recovers,” the company said.

“COVID-19 costs are expected to continue to moderate further, particularly as public health requirements are eased. Supplier input cost inflation is expected to continue in the fourth quarter and into FY23.”

Extreme weather & COVID-19 impact Dan Murphy’s Q3 results