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Coles names first female CEO, locks in strong profits

Business

Coles has named its first woman chief executive as the supermarket giant notches up better-than-expected earnings.

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Longtime Coles executive Leah Weckert will replace Steven Cain when he retires on May 1.

The supermarket giant posted $616 million in half-year profit on Tuesday, up 11.4 per cent from a year ago, beating analyst expectations.

Sales revenue was up 3.9 per cent to $20.8 billion – $18.9b from sales at its 842 supermarkets and $1.9b from sales at its 940 liquor stores.

Of that, $1.4b or 7.2 per cent were e-commerce sales.

Total earnings before interest and tax grew 9.9 per cent to $1.06b.

“We continue to make progress on growing long-term shareholder value by executing our strategy, while recognising the significant challenges facing many of our customers and suppliers,” Cain said.

Coles said the cost pressures it was experiencing remained elevated, particularly related to packaged goods, wages and energy.

Supermarket prices rose 7.1 per cent in the first quarter and 7.7 per cent in the second.
Improved growing conditions meant prices fell for tomatoes, capsicums and broccoli, but meat and bread prices rose.

Coles expects inflation to moderate from the peak seen in the second quarter, but also anticipates customers being more value conscious as cost-of-living pressures increase.

“We are seeing customer behaviours shifting to more value-oriented choices, as a result of higher inflation and interest rates and the cost of energy increasing,” chief financial officer Charlie Elias told analysts.

Coles said there had been construction delays on its high-tech automated warehouse being built on the outskirts of Sydney, which is due to open after a similar site in Victoria next year.

Coles announced a fully-franked interim dividend of 36c per share, up 9.1 per cent from a year ago.

E&P Financial retail analyst Phillip Kimber said it was a solid result.

He said better than expected profits and strong supermarket sales growth was expected to outweigh any concerns about the change in chief executive.

Coles chairman James Graham said Weckert had an outstanding track record of leadership and driving change inside Coles across key areas of the business.

Graham said her personal and professional qualities made her uniquely qualified for the role.

Weckert, who holds a MBA from Harvard University, has worked at Coles since 2011, including as chief executive for commercial and express and chief financial officer.

“I am very honoured to be appointed as the next CEO of Coles, which has been such an important part of Australian retailing for more than 100 years, and play a part in its ongoing contribution to the Australian community,” Weckert said.

She’ll receive a base salary of $2 million plus long and short-term incentives.

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