Coles revealed that the price of its products has risen 4.3% in the last financial year as the cost of living crisis in Australia continued to affect consumers.
The supermarket giant revealed in its financial results Wednesday that the price of its products and its operating cost were both negatively impacted by inflation in the 2021-22 financial year.
“In July, we saw further inflation in commodity costs due to the recent floods, baked goods due to grain prices and packaged food products due to various increases in chain costs. procurement, including wages, packaging, raw materials and transportation, ”Coles said in a report.
“In line with our suppliers and customers, we are also seeing inflationary pressures impacting our cost base as wages, rents, fuel, supply chain and capital costs rise.
“Additionally, Covid and the flu have seen an increase in absenteeism costs for team members which continue to impact the business.”
Coles revealed that total supermarket price inflation of 1.7% was recorded in the last financial year.
But in the fourth quarter, this inflation rose to 4.3%, a particularly strong figure for fresh produce.
“In the fourth quarter, new inflation was 4.7% and was driven by both baked goods, reflecting rising wheat prices, and fresh produce, due to floods in Queensland and New South Wales. which have impacted supply, particularly in grapevines and vegetables such as tomatoes, peppers and broccoli, ”Coles said.
“Raw materials, raw materials, shipping and fuel costs remained the main driver of supplier input cost requests received in the fourth quarter, impacting inflation of packaged products. . “
The supermarket giant’s cost of ownership, as a percentage of sales, rose 50 basis points to 21.4% in the last financial year, in part due to underlying cost inflation.
He noted that one of his biggest challenges in today’s market has been rising food inflation, which has led to an increasing number of suppliers to raise their prices and “more value-oriented choices” of customers. influenced by pressures on the cost of living.
But in some troubling news for consumers, Coles has signaled that his inflation woes aren’t going to end anytime soon.
In his outlook for fiscal year 2023, Coles said rising inflation and rising interest rates will continue to put pressure on many households.
He also said that inflationary costs, including wages, rent, fuel, supply chain and capital costs, would impact his cost of doing business.
To counter these issues, Cole said he is focusing on promoting unique initiatives and products that will entice customers to shop at his stores.
“With rising inflation and rising interest rates putting pressure on many households, Coles will continue to focus on delivering reliable value to customers through our Exclusive to Coles differentiated range. , our exclusive liquor brands and our Flybuys loyalty program, ”she said.
“We have also frozen the price of 1,168 products in supermarkets and online at least until January 31, 2023 and have started to lower the price of another 500 products.”
Coles Group CEO Steven Cain also said its “smart sales program” would help lower the inflationary costs of doing business.
“We have now achieved the third year of our transformation strategy, including significant growth in our e-commerce operations coupled with further efficiencies through our smarter sales program,” he said.
“Continued headwind of rising inflation underscores the importance of our smarter sales cost reduction program and the commencement of commissioning three of our four Witron automated distribution centers and Ocado customer processing centers. in fiscal year 24 will enable us to improve future efficiency while providing improvement by offering to inspire customers, ”he said.
Coles reported net income of $ 1.048 billion for fiscal year 2021-22, up 4.3% from the previous year.
It also recorded annual revenue of $ 39.75 billion, a 2% increase from the previous fiscal year.