(Recasts and writes through with shareprice, fresh CEO and
analyst comment)
By Byron Kaye and Roushni Nair
SYDNEY/BENGALURU, April 28 (Reuters) - Australian No. 2
supermarket chain Coles Group Ltd on Friday said store
price inflation eased in the March quarter as supply chain
blockages improved, but flagged a surge of demand as living cost
pressures lead to more people eating at home.
The trading update from one of Australia's biggest retailers
gives a sense of an economy still struggling to contain
inflation even as its central bank slows the pace of rate hikes.
Coles and larger rival Woolworths Group Ltd ring up
two-thirds of Australian grocery sales and are seen as
bellwethers of consumer behaviour.
Coles said supermarket sales jumped 7% in the third quarter
to A$8.6 billion ($5.7 billion), better than analysts forecast,
as it passed wholesale costs to shoppers. Total supermarket
inflation slowed to 6.2% from 7.7% three months earlier, when
flooding elevated fresh produce costs.
The company, which did not disclose earnings, said it was
receiving fewer requests from suppliers to put up prices than
the previous quarter but it expected persistent demand as
spiralling energy and mortgage costs, as well as rising
immigration, brought shoppers to its 841 supermarkets.
CEO Steven Cain, who retires this month, said on an analyst
call there was "still a lot of Uber Eating going on" but he
expected a shift to grocery shopping in the next three to six
months as higher interest rates and energy prices change
behaviours.
Coles shares were down about 2% by midsession as analysts
questioned its ability to benefit from fragile economic
conditions.
"Inflation has moderated slightly ... as expected but
remains at high levels," Jefferies analysts said in a client
note.
E&P Financial said that despite increased sales, Coles's
profit margins may be impacted by stock losses related to supply
chain problems and store theft.
($1 = 1.5085 Australian dollars)
(Reporting by Byron Kaye in Sydney and Roushni Nair and
Archishma Iyer in Bengaluru; Editing by Sherry Jacob-Phillips
and Stephen Coates)
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