Supermarket giant Coles has seen its profits fall under the shadow of the “case of the century” brought forward by the ACCC.
The 11.3 per cent decline in after-tax profit for the first half of this financial year came despite growth in its supermarket division.
Sales, gross margin and earnings before interest and tax (EBIT) all grew in the company’s supermarkets. The $23.1 billion in revenue from grocery stores accounted for 90 per cent of Coles’ revenue for the period.
Liquor sales had a “subdued” period, Coles said, with a 3.2 per cent fall in revenue and a 37 per cent decline in EBIT.
In its report to the ASX, Coles referenced provisions from regulatory disputes that affected its after-tax profits. The Fair Work Ombudsman passed a judgment on September 5, last year over claims the company had not been following the general retail industry award (GRIA) guidelines when remunerating its staff.
The case was heard in the Federal Court of Australia. The outcome and subsequent settlements resulted in a $235 million cost to Coles, with the company adding that there’s a “risk” of further payments.
The matter, involving 15,011 members of staff, led Coles to pay $31 million in remuneration to employees following its internal review.
More regulatory trouble has come to light, with the ongoing ACCC dispute over the supermarket’s longstanding “Down Down” promotion yet to be resolved.
Coles maintains its innocence in the case, despite the ACCC’s allegations that it had misled customers with its discount promotion. With “at least” 245 products being reviewed, Coles said the cost of any outcome is uncertain.
