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Wesfarmers makes strong start to the financial year

Wesfarmers has released its sales results for the first quarter of 2012 financial year, reporting sales growth in its food and liquor, hardware and office supplies businesses but warning the next quarter won’t be easy.

Coles food and liquor store sales grew by 5.2 percent, with headline sales up 5.5 percent on the previous year.

Coles managing Director Ian McLeod says despite price deflation of almost two percent and strong progress in a challenging retail environment, the next quarter will not be easy.

Weak consumer confidence in the face of rising living costs will continue to make trading conditions challenging in the lead up to Christmas.”

Coles Express made progress with comparable fuel volume growth of 5.2 percent, reflecting the success of the fuel and convenience offer. Convenience store sales also grew by almost two percent, excluding fuel.

Wesfarmers home improvement sector experienced growth in both consumer and commercial areas across most trading locations. As a result, total sales at Bunnings Warehouse were up 8.5 percent on the previous corresponding period.

Office supplies sales grew by less than half a percent despite significant price deflation across a number of products, where focus on better value meant reduced sales performance.

Targets sales for the first quarter were 1.4 percent below the previous year, with comparable store sales down greater than 4 percent. Target Managing Director, Launa Inman points to difficult trading conditions for the drop.

“Customers continue to be very value driven, and their behaviour is being influenced by the continuous promotions and heavy discounting in the market place.”

Similarly, Kmart experienced weak growth with comparable store sales increasing only half a percent over the quarter.