Coles lifts profit on steady sales

Press, 14 September 1987, Page 14

Coles lifts profit on steady sales

By

PATRICK LYONS

of AAP (through NZPA) Melbourne

The big Australian retailer, Coles Myer, is looking to Australia’s bicentennial celebrations next year to kick along consumer spending after announcing that profit for the latest year jumped 20 per cent, despite depressed retail sales. The chairman and chief executive of Coles Myer, Mr Brian Quinn, said the sAust2lB.6M ($NZ253.57M) profit for the year ended July 26 was outstanding in the current retail climate. Sales climbed a modest 9.3 per cent to sAustll.4 billion (5NZ13.22 billion). But Mr Quinn said the company thought the momentum for retail sales would probably pick up next year as Australians and visitors took part in bicentennial festivities.

“It is to be hoped that all of the activity to celebrate that event will undoubtedly stimulate tourism to the country and lift consumer spending activity domestically as well,” Mr Quinn said. He ascribed the generally depressed state of the retail sector to the Federal Government’s moves to restrain domestic demand. The current halfyear would be little different from the flat conditions in the latest year.

Mr Quinn confirmed that overseas expansion was very likely and, although saying it was not one of the company’s highest priorities, left the impression that an acquisition could be made during the current year. He said Coles Myer had been inundated with opportunities from almost every country since the likelihood of an overseas move had been raised.

“The longer term most likely will see this company make some move offshore,” he said. Mr Quinn said increased company tax on the improved result, the fringe benefits tax and other tax changes had increased the total tax bill almost 50 per cent to

sAustl9B million (5NZ229.6 million) from sAustl32.l million ($153.23 million). The higher profit, which saw pre-tax earnings soar sAustlO2M ($118.32M) to S4I6M ($482.56M), was because of better efficiency and stock control and 22 per cent lower interest costs of SI27M from 1154.1 M. Myer, although having achieved its best profit ever and a satisfactory return on investment in the latest year, was not operating satisfactorily. Nor were any of the other businesses.

“We have much improving to do within Australia,” he said. According to information supplied by the company, Myer Stores more than doubled its pre-tax profit to $77.6M from $31.4M.

The food and liquor division earned $211.7M pre-tax from $197.2M, but .was almost overtaken by the discount stores sector which lifted profit to $204.1M from $166.5M.

Grace Brothers lifted profit S9.BM to SS4M. The fund dividend is 14c a share, bringing the dividend for the year to 24c, compared with 21c the previous year. Mr Quinn declined to give details of extraordinary items which led to an $26.4M profit, but said the sale of fashion business, Country Road, was included.