Coles shares plunge 12.8% as competition and costs weigh on sales

Coles said competitor promotions and cost-conscious shopping weakened early second-quarter supermarket sales.
Shares fell 12.8% to A$20.47, a more than five-month low, while first-half supermarket EBIT was expected to remain flat year on year.
Coles relaunched its Every Day Price programme and introduced an exclusive Christmas range as it sought to rebuild momentum against Woolworths.

Coles shares fell as much as 12.8% to A$20.47, their worst intraday session and a more than five-month low, after the Australian supermarket chain said heightened competitor promotions had weakened early second-quarter sales. Cost-conscious shoppers compared prices across retailers and channels and used promotions and loyalty programmes more heavily. Supermarket sales growth slowed to 3.6% in the first four weeks of the second quarter, below Visible Alpha’s 5% consensus forecast, while Coles said first-half supermarket EBIT would be in line with the prior corresponding period and flagged higher fuel-related costs. The update reinforced concerns that Coles was losing ground to Woolworths, whose supermarket sales grew 6.1%.