COL - Coles Group

[Dona Ferentes]

slowing sales a reality post Covid ... consumption brought forward?? Changing consumer habits?

Coles continued to experience elevated sales as a result of COVID-19 which saw the prior trends of basket consolidation and fewer shopping trips persist during the half, however, transactions were supported in December by international border restrictions which saw more Australians stay at home over the Christmas holiday period.

 

[Dona Ferentes]

clawed its way up on today's numbers (not as bad as anticipated); still under $16

April sales at Coles rose a higher than expected 4 per cent and CEO Steve Cain said trading was trending to more normal patterns, with customers returning to CBD stores and shopping centres, rather than favouring neighbourhood stores, as they did in 2020, as pre COVID19 shopping habits returned.

But food retailers continue to battle for market share; Coles dropped prices (excluding tobacco and fresh foods) on average falling 0.8 per cent ... the first quarterly deflation since 2018 ... compared with price inflation of 1.8 per cent a year ago. Deflation in the quarter was largely a result of the cycling of pantry stocking which led to uncertainty of supply and lower promotional mix, and fresh produce deflation particularly in vegetables, as a result of droughts and bushfires in the prior corresponding period.

Coles' total March quarter sales fell 5.4 per cent to $8.7 billion, with weaker supermarket sales offsetting 2.6 per cent growth in liquor and 7.4 per cent growth in convenience stores. Online food sales jumped 49 per cent, with sales penetration increasing to 5.5 per cent in the third quarter, up from 5.3 per cent in the December quarter. Online liquor sales soared 72 per cent.

 

[sptrawler]

clawed its way up on today's numbers (not as bad as anticipated); still under $16

It does ask the question, whether the Australian market place is big enough for two major food chains?
Aldi, Metcash and small deli's, 7/11 etc mop up the fringe.
I have divested WOW and COL, put the proceeds into AFI.
Reason being they pay a better dividend and have more resources to dedicate on who has the best business model.
Just my opinion.

 

[Dona Ferentes]

It does ask the question, whether the Australian market place is big enough for two major food chains?

Yes. (ACCC will ensure at least that)
But three, of equivalent size?
Probably not. Franklins tried. Metcash/ IGA is not 'major' but intermediate. Aldi is down market, own brand. And suffered through not doing deliveries during the pandemic. Kaufland tried. Costco is fringe. 7-11 is impulse

I have divested WOW and COL, put the proceeds into AFI. Reason being they pay a better dividend and have more resources to dedicate on who has the best business model.

Diversification for me. Tick. More resources by AFI or similar. Tick.

Interesting that you did this, SP. I was thinking the same; why is it in the portfolio? I'll keep Wesfarmers but the small holding of Coles is pointless. I even looked up the Cost Base from when it was hived off from WES ($12.73?) and then decided next FY.

With a market cap of $21B and in the ASX Top20, the shareholder base is driven by fund managers, institutions and index funds. Retail is just around the edges; when news moves the analysts to either buy or sell, then the change can be dramatic. This has been shown twice recently; The Feb half year results saw news of slowing sales post Covid, with the acknowledgement of consumption brought forward and changing consumer habits. There was a drop from $18 to under $16, almost overnight Woolies had a drop but not as dramatic, and MTS hardly moved at all.

Then, just recently, the 3Q numbers showed COL having lower Q sales, and then WOW came out with less of a sales drop but its shareprice fell more than Coles, which has actually risen .. all got to do with expectation and whether the analysts got it right or need to do sudden revisions on their spreadsheets.

So, yes, leave these sorts of shares to those that pay greater attention is a good idea. Not only the binary choice of one versus the other, but also sectoral weight and value versus growth dynamics.

Think I'm talking myself into selling, sooner rather than later

 

[sptrawler]

Coles looking to take on board the Aldi model.

In-store butchers face the chopping block in Coles proposal

Hundreds of trade-qualified butchers may be "redeployed" and meat only provided pre-packaged under a proposal being considered by the supermarket giant.

www.abc.net.au

 

[Miner]

11 July to 4 Dec. Long gap so my two cents after visiting Bunnings today .
Fly buys started in Bunnings.
Wesfarmers are shown hectic interest with woolworth on pharma.
Could WES look back to take back Col under its wings while courting with WOW?
Vanguard does not think so however. So they are unloading.
Morningstar said sell.
Do not hold.

 

[Dona Ferentes]

11 July to 4 Dec. Long gap so my two cents ....
Could WES look back to take back Col under its wings while courting with WOW?

Held onto my COL since the spin out, but let them go recently. Got $18.02, then they fell last week.

Some say the stock is an inflation play, because they keep margins as prices lift; am not so sure.

I'd been thinking about selling and @sptrawler was helpful in refocusing on them. ?

WES would never revisit, I don't think. The flybuys data is useful for "insights" but they're into jazzier stuff.

 

[Ann]

Vanguard does not think so however. So they are unloading.

I think a major investor has dumped Vanguard, (bloody day trader!) I am seeing these notices all over the place at the moment.

Coles chart is a tough one. The daily looks like it should be dumped but looking at it on the monthly chart, it gives some degree of confidence.

Could WES look back to take back Col under its wings while courting with WOW?

I think not. I am guessing they can see a way to improve Priceline et al. COL they may have fixed...dunno just a thought. Their meat is still yucko, but so is Woolies now as well. Coles have a darn nice $5 dark fruit cake but!

 

[divs4ever]

the only reason i can think of for Vanguard to reduce COL , is because of the alcohol arm ( and ESG mandates )

if Vanguard wants to bulk up on WOW well good for them

i hold both COL ( courtesy of the WES demerger ) and WOW ( inherited but reduced by 90% since )

maybe COL will drop below $10 and actually tempt me to BUY some

 

[Ann]

if Vanguard wants to bulk up on WOW well good for them

Nope, dumped WOW on the 17the Nov. I am sure they have been told to F off by a substantial investor.

 

[divs4ever]

an interesting strategy to lighten the load on WOW and COL , did anyone bulk up on MTS , or is that sector being deserted , surely WOW and COL are considered safe havens in the Oz economy

 

[Ann]

did anyone bulk up on MTS

State Street Corporation 21st September acquired 48,788,952 - 5.05% voting power for MTS. I have noticed a number of State Street purchases. I am thinking someone has dumped Vanguard and moved to State Street. Just a thought!

 

[divs4ever]

well that wasn't me back then , but my Vanguard holdings are up for sale .. at a price

although i have have a good run with SYI , i can't guarantee State Street will get extra cash in the future .. MVW is the only ETF on my shopping list currently ( but a melt-down could change that )

 

[Dona Ferentes]

and COL down a few percent on the WOW update

Woolworths’ first half Australian Foods earnings are expected to be weaker than a year ago with COVID-19 costs still biting the supermarket giant. The company said while its sales and customers remained strong relative to the overall market, both indirect and direct costs associated with COVID-19 had weighed.

“The first half of FY22 has been one of the most challenging halves we have experienced in recent memory due to the far-reaching impacts of the COVID Delta strain and its impact on our end-to-end stock flow and operating rhythm,” said Woolworths chief executive Brad Banducci.

“Sales growth in Australian Food is positive on a one-year basis and strong on a two-year basis but moderated in Q2 following the easing of restrictions in NSW and Victoria.

“However, the ongoing material costs of operating in a COVID environment has impacted our expected earnings in the first half. COVID has had a significant impact on costs, even more so than last year due to the combination of both direct COVID-related costs, together with the indirect impacts from disruption caused by COVID.

“This includes the significant disruptions we have seen across the end-to-end supply chain, and the material inefficiency this causes in our stores, distribution centres and transportation.“

 

[divs4ever]

i was going to wait for a couple of annual reports to be tabled before i consider putting actual cash into COL shares ( the holding i have was courtesy of the WES spin-off )

as far as i am concerned these are truly unusual times , and am not sure how things will pan out if major shopping malls start to die ( in theory COL should do slightly better if that happens , but i think MTS might be a winner if that trend happened )

i also note WOW-supplier alliances tend to be the 'kiss of the vampire ' for the small guy , which i why i gambled on FIJ recently and their COL placement agreement ( which i hope will be mutually beneficial )

 

[Miner]

i was going to wait for a couple of annual reports to be tabled before i consider putting actual cash into COL shares ( the holding i have was courtesy of the WES spin-off )

as far as i am concerned these are truly unusual times , and am not sure how things will pan out if major shopping malls start to die ( in theory COL should do slightly better if that happens , but i think MTS might be a winner if that trend happened )

i also note WOW-supplier alliances tend to be the 'kiss of the vampire ' for the small guy , which i why i gambled on FIJ recently and their COL placement agreement ( which i hope will be mutually beneficial )

Couple of annual reports meaning at least two years . That is a real good long term strategy.
Looking into one year travel of the stock price, it looks like after December sales, there is a trend to go down.
Is that happening today and over last week ?
Would the outcome of Ombudsman's finding in due course of time, would make any dent or polish of dent ?

https://cdn-api.markitdigital.com/apiman-gateway/CommSec/commsec-node-api/1.0/event/document/1410-02461549-553IME09NEOE236KV2DFE5O706/pdf?access_token=0007LkvDpP52jwsPLembRgq1jtot

DNH

 

[Dona Ferentes]

Looking into one year travel of the stock price, it looks like after December sales, there is a trend to go down.
Is that happening today and over last week ?

I've been watching COL and WOW go down, pretty much in sync (though MTS hasn't) and have attributed it to the costs associated with Covid. And specifically Omicron.

How Omicron is shutting down huge swathes of Australia's economy

The rapid spread of the Omicron variant is hitting the heart of the economy as an unprecedented shortage of workers throws the supply of goods and services into chaos.

www.abc.net.au

The HR juggle with staff shortages, of absent staff, losing significant percentage of workers either isolating from the virus or in isolation due to close contact, is eating in to operations.
And the supply line issues; of producing then processing then getting it to customer. Trucking is badly hit. Processing lines are hit.

Supermarkets are seeing shortages of food, particularly fresh fruit and vegetables and meat products, as staff come down with COVID-19 at their warehouses and in stores.

Interestingly, the smaller distribution networks aren't as impacted. Less complex logistics. Our local butcher is doing well, as is the corner store (yup, we still have one)

 

[Miner]

I've been watching COL and WOW go down, pretty much in sync (though MTS hasn't) and have attributed it to the costs associated with Covid. And specifically Omicron.

How Omicron is shutting down huge swathes of Australia's economy

The rapid spread of the Omicron variant is hitting the heart of the economy as an unprecedented shortage of workers throws the supply of goods and services into chaos.

www.abc.net.au

The HR juggle with staff shortages, of absent staff, losing significant percentage of workers either isolating from the virus or in isolation due to close contact, is eating in to operations.
And the supply line issues; of producing then processing then getting it to customer. Trucking is badly hit. Processing lines are hit.


Interestingly, the smaller distribution networks aren't as impacted. Less complex logistics. Our local butcher is doing well, as is the corner store (yup, we still have one)

@Dona Ferentes - may be it is time for the local butcher to float an IPO

 

[divs4ever]

I've been watching COL and WOW go down, pretty much in sync (though MTS hasn't) and have attributed it to the costs associated with Covid. And specifically Omicron.

How Omicron is shutting down huge swathes of Australia's economy

The rapid spread of the Omicron variant is hitting the heart of the economy as an unprecedented shortage of workers throws the supply of goods and services into chaos.

www.abc.net.au

The HR juggle with staff shortages, of absent staff, losing significant percentage of workers either isolating from the virus or in isolation due to close contact, is eating in to operations.
And the supply line issues; of producing then processing then getting it to customer. Trucking is badly hit. Processing lines are hit.


Interestingly, the smaller distribution networks aren't as impacted. Less complex logistics. Our local butcher is doing well, as is the corner store (yup, we still have one)

i dumped MTS a fair while back ( mid 2015 and below $1.20 ) before the bought the hardware wreckage from WOW , in hindsight that was obviously a mistake ( but i still make some )

i currently hold more COL ( courtesy of the WES spin-off ) than WOW but i fully participate in the WOW , but not in the COL one , so in a few years WOW might catch up , WOW would probably have to reinvent itself ( not rebrand ) before i would actually BUY more , and am more likely to buy extra EDV ( the current holding is courtesy of the WOW spin-off ) than WOW

am not rushing to buy extra COL or EDV , currently , but that could change if the results look good ( in the next two years )

now i doubt it will happen but since MTS services a wide range of franchisees , what chance of mini-malls mostly tenanted by MTS franchisees , say a hardware , liquor outlet and IGA , they are some small strip malls on their knees , MTS could bundle the malls into a REIT ,

WOW is trying to do similar with SCP as the landlord ( in some cases )

 

[frugal.rock]

I went to a Coles last night with a craving for liverwurst.
None.
The deli area has been replaced with pre sliced salami etc in fridges.
Over the other side of the shop near yoghurt and fresh juices are the brand names salamis, Don, Hans etc
No liverwurst anywhere but a million different other processed crap stuffs, hot dog franks, salamis, hams etc etc mind boggling the array of stuff between both sections.

So I tried a different Coles today... same deal. No liverwurst.
I asked a staff member who said they don't sell it anymore and pointed to the area on the shelf where she used to place them.... no price tag anymore.

My craving for liverwurst drove me to a Woolworths....
They had some Don brand. They were out of another brand, but the price label was right there next to the other one.

Mmmmmm, Latvian liverwurst.
Yummo.
Mostly, only older people would understand this liking for such an offal product.
Craving satisfied, no thanks to Coles though.
For shame Coles...
?