Wesfarmers outdoes rival

PERTH: Wesfarmers, Australia's second-largest retailer, posted same-store food and liquor sales that outpaced Woolworths for the first time since acquiring the business in 2007, sending its stock to a 13-month high.

Revenue from Coles supermarkets open at least a year gained 6.1 per cent in the three months ended September 27, Perth-based Wesfarmers said yesterday, without providing a specific sales number.

Comparable sales at Woolworths, the nation's largest retailer, rose 5.8 per cent in the first quarter, the Sydney-based company reported on Monday.

Under Coles managing director Ian McLeod, fruit, vegetable and delicatessen areas are being revamped to win sales from specialty stores as the company spends A$1 billion ($1.2 billion) annually sprucing up its outlets. The former executive with Wal-Mart Stores' Asda supermarket chain brought in new people to head liquor, store formats and marketing.

"Any evidence of success in turning Coles around reduces investor concern as to the execution risk on Wesfarmers' attempt to resurrect that business," said Angus Gluskie, who oversees about US$300 million ($396 million) at White Funds Management in Sydney.

Wesfarmers shares rose as much as 7.9 per cent to A$28.54 in Sydney trading, their highest level on an intraday basis since September 24 last year. Woolworths shares rose A5c to A$29.46.

Wesfarmers paid A$18.2 billion in cash and stock to acquire Coles Group in November 2007, adding the nation's second-largest grocer to businesses that range from coal mines, chemicals and home improvement stores.

Total first-quarter food and liquor sales rose 7.3 per cent, Wesfarmers said yesterday. That compares with 7.8 per cent growth at Woolworths.

Sales at the company's Target discount department store chain rose 4.3 per cent with same-store revenue gaining 1.8 per cent.

Comparable or same-store sales are used to measure a retailer's performance because they exclude recently opened or closed locations.

- BLOOMBERG