WESFARMERS BOOKS BUMPER PROFIT BUT SUPERMARKET WAR HITS COLES' BOTTOM LINE

SUPERMARKET giant Coles has posted its biggest slide in earnings since it was acquired by Wesfarmers (ASX: WES) 10 years ago as it faces intense competition from Woolworths and German chain Aldi.

Wesfarmers revealed Coles' earnings plunged 13.5 per cent to $1.61 billion which is the first earnings decline since it acquired the business in 2008.

Analysts had expected Coles to drag on Wesfarmers' bottom line because of Woolworths' multi-billion dollar campaign to drive prices lower, which has increased its own sales growth.

Wesfarmers also warned that Coles would continue to come under pressure in the 2018 financial year.

"In a very competitive environment, sales and margin pressures in Coles are expected to persist," Wesfarmers CEO Richard Goyder says.

"Within this environment, Coles will focus on plans to further enhance the quality of its fresh offer, and improve merchandising and availability, while continuing to drive operational efficiencies to support investments in value and service." Read more

Ben Hall - Business News Australia - 17 Aug 2017