Coles Myer has outlined a number of initiatives in effort to claim the title of number one grocer in Australia, including an initial $850 million investment to buy new and upgraded existing stores in its portfolio.
Yesterday, Coles Myer chief executive John Fletcher said the group will buy up to 25 new stores and upgrade more than 70 stores for its Coles Supermarket.
The group will also buy 15 1st Choice Superstores and upgrade up to 30 Liquorland; buy two new stores for Kmart and upgrade 20; 6-8 new stores for Target and 20 upgrades; and 10 news stores for Officeworks.
Fletcher said the group would drive sales and earnings growth by further simplifying its business to invest in stores and customers’ shopping experience.
“We have spent the last nine months researching our customers, team members, suppliers and the world’s best retailers to ensure there is overlap between our current and next strategic direction,” Fletcher said.
The group will also be renamed and rebranded to Coles Group Limited.
Fletcher said the new group name reflected a business which had already begun the journey of simplification, with the $1.4 billion sale of Myer businesses
The Myer sale realised a profit of approximately $600 million for the group.
Fletcher said that the group’s FY06 guidance of $785 million NPAT pre the sale of Myer remained unchanged
“The Group will also make a provision of up to $300 million against FY06 earnings to largely cover the cost of strategic initiatives.
“Meanwhile, the comparative sales growth trend in Q4 was continuing to improve in food and liquor. FY07 would be a year of transition, with the business delivering underlying earnings and EPS growth. Headline earnings would be impacted by the cost of the transformation program peaking in FY07, and funding of the strategic initatives which required a significant operating and capital investment beyond the provision. Net capital expenditure for the year would amount to $1.2 billion,” he concluded.
By Kathryn O’Meara
