First Half Sales Report
13 Febbraio 2002 - 9:02AM
UK Regulatory
RNS Number:3816R
Coles Myer Ld
13 February 2002
Coles Myer first half sales up 8.4%
Coles Myer Ltd (CML) today announced sales of $13,279 million for the half year
ended 27 January 2002. This represents an 8.4%(1) increase over the previous
year. Sales for the second quarter rose by 9.7%(1) to $7,331 million.
John Fletcher, Coles Myer Chief Executive Officer, said: "We have seen promising
early progress as we continue to rebuild the business, with General Merchandise
and Apparel Group (GM&A) sales(1) increasing by 6.9% in the second quarter. Food
and Liquor's strong sales growth continued, with an 11.9% increase in the second
quarter. CML'S comparable store sales rose by 4.5% over the half, including
second quarter growth of 5.7%.
"Sales growth over the Christmas and clearance season was encouraging. Good
progress has been made by GM&A in reducing year-on-year inventory levels and
improving ranges, service levels and price competitiveness. The early response
from customers has been positive. However, there are transitional costs
involved in this reinvestment phase, particularly during the first half, as we
build for sustainable long-term growth.
"The initiatives outlined under Operation Right Now are progressing to plan.
Benefits are building incrementally and will increasingly flow through in the
second half of this year," Mr Fletcher said.
Food and Liquor
Alan Williams, Chief Operating Officer Food, Liquor and Logistics said: "We
continue to refine and grow what is already a robust business, complemented by
selective acquisitions.
"The integration of ex-Franklins stores is progressing smoothly, with sales in
line with expectations. Our dual branded strategy with Coles and Bi-Lo has
assisted in attracting previous Franklins' customers.
"A further 17 ex-Franklins stores have been secured over the second quarter,
bringing the total to 37. The additional acquisition cost was $15 million, with
annualised sales of around $270 million. Additional capital refurbishment costs
of $32 million are expected. We commenced trading in 29 ex-Franklins stores
during the half, and a further 9 new supermarkets were also opened during this
period.
"Excluding the ex-Franklins stores and Red Rooster, Food and Liquor sales grew
by 9.7% in the second quarter (9.8% in the half year), despite an increasingly
competitive environment that included strong promotional activity across the
sector.
"The re-badging of the ALG stores to Liquorland and Vintage Cellars is mostly
complete and marketing programs have commenced.
"Our combined acquisitions in Food and Liquor, now including the additional 17
ex-Franklins stores, will be earnings dilutionary in FY2002," Mr Williams said.
General Merchandise and Apparel
Warren Flick, Chief Operating Officer, GM&A said: "Sales momentum continued to
build in the second quarter, with sales rising 6.9% against first quarter sales
growth of 2%. The result was assisted by considerable reinvestment in pricing
and service levels to improve competitiveness.
"Our summer clearance program is progressing to plan, with total GM&A inventory
levels at the half year end being around 15% lower than prior year, with Target
achieving the greatest improvement. This has resulted in increased stock turns
and lower working capital.
"Myer Grace Bros (MGB) sales, including Megamart, increased by 6.9% in the
second quarter, compared with 2.5% growth in the first quarter. MGB'S
substantial reinvestment in service standards and store presentation, which
began in the third quarter of FY2001, was well received over the important
Christmas and clearance season. This level of service is critical to achieving
sustainable sales momentum; however, margins are being impacted as revenue
progressively rebuilds.
"Category performance was strongest where new brands have been introduced in
apparel, cosmetics and footwear, and we expect this will accelerate in the
second half. Sales were also driven prior to Christmas and during Stocktake by
the clearance of non-strategic private label product and additional promotional
activity on slow-moving homewares merchandise. Inventories have been well
managed and are at an appropriate level and quality going into winter.
"Megamart achieved strong sales growth in its key categories of large
appliances, electronics and furniture.
"Target sales increased 2.5% for the second quarter compared with a 0.8%
increase in the first quarter. The growth was achieved on a high prior year base
inflated by heavy promotional activity.
"New apparel ranges continue to trade well, underpinning Target's progress.
Clearance of discontinued home and entertainment stock has been largely
completed, and new lines are being progressively introduced.
"Importantly, with substantially lower inventory levels and sales driven by the
new product offer, margins have strengthened over the period.
"Kmart and Officeworks combined sales increased by 10% for the second quarter
compared with a 2.3% rise in the first quarter. Kmart has experienced strong
sales growth with the introduction of its more competitive pricing strategy.
General merchandise and expanded consumables were the best performing categories
during the second quarter, with some areas of apparel softening in late
December.
"Kmart's new competitive price positioning has been well received by customers,
as evidenced by the sales growth. However, the introduction of the improved
offer was done in full recognition that the cost reductions would lag. The
benefits of Operation Right Now in Kmart are building incrementally and will
increasingly flow through in the second half of the year.
"Officeworks continued its strong growth record," Mr Flick said.
e.colesmyer
Sales rose by 5.7% over the second quarter following a 5.1% decline in the first
quarter. Excluding Myer Direct, which reduced its catalogue program in
preparation for a sale of the business, e.colesmyer achieved 16.6% sales growth
over the second quarter, led by strong performances from Harris Technology and
Coles Online.
Outlook
Mr Fletcher said "We remain on track with our 2 year turnaround program. We
continue to anticipate FY2002 net profit after tax to be around 20% higher than
last year's underlying net profit result(2). During the first half of the year,
margins will be impacted by transitional costs involved with the reinvestment
phase, and incremental savings are expected to flow through in the second half."
The FY2002 half year profit will be announced on 14 March 2002, followed by a
strategic update on 26 March 2002.
(1) Excluding Katies, which was sold on 27 November 2000. Including Katies, CML
sales increased by 8% in the half and 9.5% in the second quarter, and GM&A
sales increased by 3.8% in the half year and 6.4% in the second quarter.
(2) FY2001 underlying net profit was $333 million, before Reset Convertible
Preference Share dividends.
For further information:
Media Scott Whiffin 03 9829 5548
Analysts Amanda Fischer 03 9829 4521
Financial analysis
Second Quarter Half Year
(13 weeks) (26 weeks)
2001 2002 Change 2001 2002 Change
$m $m % $m $m %
Business Group *
Food & Liquor 3,750 4,198 11.9% 7,203 7,995 11.0%
GM&A (excluding Katies) 2,856 3,053 6.9% 4,900 5,137 4.9%
Myer Grace Bros & Megamart 995 1,064 6.9% 1,678 1,764 5.1%
Target 756 775 2.5% 1,282 1,305 1.8%
Kmart & Officeworks 1,105 1,215 10.0% 1,939 2,068 6.7%
e.colesmyer 75 80 5.7% 146 147 0.5%
Total Sales (excl Katies) 6,682 7,331 9.7% 12,248 13,279 8.4%
Geographic Mix
Australia 6,643 7,289 9.7% 12,186 13,211 8.4%
New Zealand - $AUD 39 42 8.1% 63 68 7.7%
New Zealand - $NZ 50 52 4.2% 82 83 1.6%
Comparable Store Sales 5.7% 4.5%
* All figures exclude GST
Additional Franklins stores secured
State Store locations
NSW Edgecliffe, Riverwood, Thirroul, Ingleburn, Belmont,
Hillsdale
VIC Waurn Ponds, Lavington, Sebastapol, Mentone, Auburn,
Hampton Park, Coburg, Greensborough
SA Mt Barker, Unley, Windsor Garden
This information is provided by RNS
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