Coles Group has released its FY24 results, which saw liquor sales revenue of $3.7 billion increase by 2.3% on the prior year, normalised at 0.5%. However, sales growth was impacted by what the company described as “a challenging liquor market”.

Sales were impacted by customers reducing their discretionary spending due to economic pressures, coupled with
the business transitioning away from less profitable bulk sales and adjusting promotional mix across third party eCommerce
channels throughout the year. Across all banners Coles said there was evidence of customers managing to a budget with units per basket declining but frequency of visits increasing.

Coles Group reported an overall 4.4% rise in revenue to $43.7 billion in the 53 weeks to June 30, while earnings rose 8.2% to $3.7 billion, sending the company’s shares to a two-year-high.

Coles Group CEO Leah Weckert said: “The financial pressures on households and families have been front of mind for us this year and we have endeavoured to deliver value across our supermarket, liquor and online offerings to help customers balance the household budget.

“At the same time, we have worked hard to deliver improvements in availability and quality, made significant inroads in
addressing loss, accelerated our digital offering, continued to maintain a strong focus on costs and completed the
construction of our second ADC and both our CFCs.”

Whilst sales revenue was particularly subdued in the second half, Coles said the trajectory improved throughout the period with sales revenue declining by 0.4% on a normalised basis in the fourth quarter compared to a decline of 1.9% in the third quarter.

Excluding less profitable bulk and affiliate sales, sales revenue on a normalised basis in the fourth quarter grew by 1.4%. eCommerce sales revenue increased by 9.2% (normalised) with penetration increasing to 6.2% (7.3% including Coles
Online).

Digital platforms continued to deliver strong growth underpinned by on-demand delivery which was expanded
to include Menulog in over 400 stores, in addition to DoorDash and Uber Eats, already in more than 600 stores.

Value and loyalty were areas of focus during the year, with campaigns such as ’Price Match’ and ’50 Days of Deals’ and
the national rollout of Flybuys points redemption at checkout at Liquorland and First Choice Liquor Market stores.

Successful cross promotions between supermarkets and Liquorland were also launched as part of trade events including
Valentine’s Day, Easter and Footy Finals.

Coles’ Exclusive Liquor Brand (ELB) portfolio added 244 new lines, expanding the portfolio across key growth categories
including craft beer and RTD and offering value across all price points.

The ELB portfolio received 538 awards during the year, with Pure Origin Tasmanian Gin awarded Double Gold at the
Melbourne International Wine, Beer and Spirits Show and Tinnies Hazy Pale Ale winning ‘Best In Show By Country’ at the
London Beer Show.

For the second year in a row, First Choice Liquor Market was named Canstar Blue’s Best Liquor Retailer Brand for 2024,
scoring five stars across checkout experience, customer service, store layout and presentation, deals and specials, and
overall satisfaction.

During the year, 97 store renewals were completed, 45 new stores were opened and ten stores closed across the
Liquorland, Vintage Cellars and First Choice banners. This included successfully completing the acquisition of 20 stores in
Tasmania. At the end of the period the portfolio comprised 992 stores.

Gross margin increased by 9 bps (normalised) benefitting from promotional optimisation and the transition away from less
profitable bulk and affiliate sales, partly offset by the increased cost of on-demand third party commissions.

Outlook for FY25

In the first eight weeks of FY25, sales revenue declined by 1.4%. The CrowdStrike outage in July impacted the period
given the number of liquor stores that were unable to trade during the outage.

Excluding the impact of CrowdStrike, liquor sales revenue declined by 0.3%. Coles said the overall liquor market remained challenging and sales continued to be impacted by the transition away from less profitable bulk and affiliate sales.

“Our focus remains on providing value to customers as well as delivering growth from the recently acquired Tasmanian liquor stores and ensuring our cost base is aligned to the current market environment,” the company said in a statement.

Weckert said: “As we look ahead, we are well positioned to deliver on our strategic priorities. With our Kemps Creek ADC ramping up and our two automated CFCs in the process of transitioning orders from stores, we look forward to unlocking the full benefits of our transformation investments, including delivering further improvements in availability and efficiency through our ADCs and delivering a world-class customer experience for online orders.

“With ongoing cost-of-living pressures, we will also continue responding to the needs of our customers with a focus on value
through every day low prices, promotions, Flybuys and Coles Own Brand.”

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