Coles supermarkets Australia good

In a bid to catch up to competitor Woolworths, Australian retailer Coles plans to sell 45 of its smaller supermarkets and associated liquor stores to independent grocery group FoodWorks for A$35m.

Cutting loose the stores will only remove about 2 per cent from Coles’ annual sales of A$17bn, and is part of parent company Westfarmers’ five-year plan to boost the retailer’s performance.

The 45 stores average 1,400m2, compared to the company average of 2100m2, reported The Age, and had annual sales of A$450m.

“They are significantly smaller than the average store…about 35 per cent below the company average by square metre,” said Coles head Ian McLeod.

“Our focus has got to be, in the early stages of the turnaround, to drive better returns out of our existing estate and larger stores in higher population density areas with limited overlap – (these) are going to be the ones where we want to focus our attention.”

Those larger stores weigh in at 700 supermarkets across Australia, and the sale of the smaller format outlets will free up funds to reinvest in those stores.

The sale will go ahead over the next nine months, pending approval from the Australian Competition and Consumer Commission (ACCC) and FoodWorks’ shareholders.