The Coles Group Ltd (ASX: COL) share price is under pressure on Wednesday morning.
At the time of writing, the supermarket giant's shares are down 0.5% to $21.30.
This follows the release of the company's third quarter update this morning.
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Coles share price falls on quarterly update
For the three months ended 31 March, Coles reported total group sales revenue of $10.38 billion. This was up 3.4% compared to the prior corresponding period. However, it was short of the consensus estimate of $10.5 billion.
Its Supermarkets division continues to lead the way, with sales revenue rising 3.7% to $9.4 billion during the period. Stripping out tobacco, which has been a drag on growth, supermarket sales increased a healthy 4.7%.
The company revealed that its customers remained highly value-conscious, with strong volume growth supported by its value offering and promotional campaigns around events like Australia Day, Valentine's Day, and the popular Harry Potter collectibles program.
Online shopping remains a bright spot, with eCommerce sales surging 25.7% to over $1.1 billion, and penetration climbing to 11.3% of supermarket sales. Fulfilment through Coles' Customer Fulfilment Centres (CFCs) continues to scale well, with more than 1.5 million orders completed and online customer satisfaction metrics improving sharply.
Two new supermarkets were opened during the quarter, alongside eight renewals.
Liquor performance
Liquor also recorded positive momentum, with sales revenue up 3.4% to $813 million. Although comparable sales were flat after adjusting for the timing of Easter, Coles flagged strong execution during key trading periods and an improved value offering across its brands.
The company's eCommerce sales for Liquor jumped 18.2%, and the division continued to grow its footprint, opening four new stores and completing 10 renewals. Importantly, Coles announced the national rollout of its Simply Liquorland program, which will see Vintage Cellars and First Choice stores rebranded under the Liquorland banner to simplify the offering and drive stronger brand recognition.
Management commentary
Commenting on the company's performance during the three months, Coles CEO, Leah Weckert, said:
We are pleased to have delivered another solid quarter of sales growth, particularly as we were cycling a very strong third quarter in FY24. These results reflect the continued investments we are making in value and in improving the shopping experience for our customers both in store and online. This period also marked our first quarter where we were able to fully operate both our Automated Distribution Centres and our Customer Fulfilment Centres, underpinning improved efficiency and delivering enhanced product availability.
Outlook
Coles advised that in the early part of the fourth quarter, Supermarkets sales growth has remained broadly in line with the third quarter. In Liquor, it has continued to see positive sales growth underpinned by the success of its recent value campaigns.
Weckert said:
With the ramp up of our second Automated Distribution Centre in New South Wales now complete, the ability to deliver a step change in online customer experience through our Customer Fulfilment Centres, and our Liquor banner simplification program underway, we enter the fourth quarter focused on delivering a great shopping experience for our customers underpinned by quality products at affordable prices.
