Australian grocer Coles’ first-half profit growth has halved to 7.1% compared to the same period two years ago as it seeks to avoid mistakes made by UK grocers.
Richard Goyder, managing director of Coles’ parent company Wesfarmers, said the reason for this decrease was Coles’ desire to remain competitive with food and grocery prices.
Goyder told The Australian: “We think it’s important to position the business for the long term and for that we need to ensure we’ve got very competitive products and we’ll continue to invest in pricing to do that. If that moderates Coles’ profit increases, then that’s fine because we’ll build a strong business.
“We’re not going to do what the UK grocery business did for short-term profits and then end up with a big problem.”
The supermarket’s profit growth of 7.1% for the first half ending December 31, compares to an 11% profit rise from one year ago, and a 15% rise two years ago.
Investors and shareholders were disappointed when Coles’ parent company Wesfarmers released the profit figures and as a result shares in Wesfarmers fell 71 cents to $45.18.
Wesfarmers’ other operations: Bunnings, Kmart and Officeworks, all reported strong profit growth, with Officeworks’ profits jumping by 19%.