The Coles Group Ltd (ASX: COL) share price is having a strong finish to the week.
In afternoon trade, the supermarket giant's shares are up 2% to $16.57.
Can the Coles share price keep rising?
Whether or not the Coles share price keeps rising from here could depend on a couple of things.
One is the performance of the ASX 200 index and the other is the company's first quarter update later this month.
In respect to the latter, let's take a look to see what the market is expecting from Coles during the quarter.
What is expected from Coles during the first quarter?
According to a note out of Goldman Sachs, its analysts expect a decent update from Coles this month.
However, it has warned that there are signs that cost of living pressures have led to consumers shifting to value options. This could have an impact on Coles, which has the biggest customer cross-over with discounters such as Aldi.
Goldman explained:
Our recent conversations with industry suppliers suggest that volumes are still holding up strongly (a positive surprise) and trading into Christmas will likely be resilient. However, there are increasing signs in value shift (as an example canned foods are having a strong growth YoY) and it is expected that it will become increasingly obvious in FY2H23 as consumers feel the increasing pinch of higher cost of living. Interestingly, cross-shopping data between the different supermarkets suggest that COL has the highest cross-shopping with discounters such as Aldi.
Nevertheless, the broker is still expecting Coles to report Supermarket same store sales growth of 2.5% for the first quarter and then 4.3% for the first half. This is then expected to ease to 3.4% in the second half and 3.8% for FY 2023.
The company's Liquor operations aren't expected to fare as well, with Goldman forecasting a 1% decline in same store sales during the first quarter. It then expects an improvement to flat same store sales for the first half and 0.5% growth for FY 2023.
