New DC network has Coles turnaround 'on track'


Turnaround of Coles is "gaining momentum", as transformation of distribution network nears finish

The turnaround of retail deputy Coles is "gaining momentum", as parent Wesfarmers reports it has almost completed the transformation of the distribution network.

The company insists it is weathering the economic storm, reporting a 46.3 percent lift in net profit after tax to $879 million for the half-year ended December 31.

It is the first six-month period of full reporting from Coles, Target, Kmart and Officeworks, all acquired through the purchase of the Coles Group last year.

"Despite the impact of a tougher consumer environment, the group’s retail businesses have generally weathered the downturn well and the Coles turnaround is gaining momentum," Managing Director Richard Goyder says.

Goyder says Coles is gaining traction, with 3.8 percent sales growth in the last quarter for the food and liquor division compared with 1.3 percent in the first quarter of 2008.

The business had a record Christmas trading period, he says, and has seen an upward trend this year.

He credits the leadership of Ian McLeod and a more "customer-focused culture".

"During the period the team has continued with the development of new store formats, achieved much better in-store availability and an improved fresh offer," he says.

The company reports its transformation of the distribution network is nearing completion, following the closure of two distribution centres in Victoria and Western Australia and the construction of the final chilled distribution facility at Parkinson in Brisbane.

Coles now works from 25 distribution centres as of December 31.

Read more on ATN sister publication SupplyChain Review - visit www.chainmail.com.au.


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