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Date : 17/06/2021

Coles Shares Down Following Company Update

COL shares are Down Down in today’s trading session. At close, COL shares ended at $16.29 a share following a 4.46% dive. The $22 billion company operates across the supermarket, liquor, and express segment, and holds 27%, 18%, and 23% market share, respectively. However, given Australia’s stagnant demographics, growth is rather limited. It’s now up to the major market leaders to strategize and gain market share over the other in order to continue growing.

Why were Coles Shares down on ASX today?

This is exactly what Coles had in mind at today’s investor day presentation. The company is looking to gain market share across its segments with 2-year sales growth targets of 11%, 19%, and 16% across supermarket, liquor, and express segments, respectively.

The firm was bogged down with a lot of its supermarkets located in large shopping centres. With the threat of the pandemic, the restrictions and Australians largely avoiding large shopping centres hurt Coles. The firm did note that they were seeing a changing scenario since April as people were a lot more positive about going out to these large shopping centres.

With eCommerce becoming the norm and growth metrics extremely positive given the ease of scalability and reduced costs that is associated with an eCommerce business model, Coles is betting big and investing in their ‘Click & Collect’ brand and is also looking to expand their home delivery service to over 400 stores and increasing their regional delivery capacity and reach.

The cost to implement this strategy of reducing costs and moving towards a digital business model is likely what has put off investors today. Despite all the strategies, Coles will continue to always be stuck in a pricing war with Woolworth – which does not bode well as it leads to margins being squeezed.

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