Fuel pump savings help Wesfarmers
The competition regulator's clampdown on fuel discounts has had a silver lining for Coles.
The Wesfarmers-owned supermarket operator has used funds that would have gone into petrol station dockets to cut grocery prices.
Coles and Woolworths restricted discounts at the pump to 4 cents a litre following an agreement with the Australian Competition and Consumer Commission.
Coles had been offered its shoppers 8 cents or more off petrol.
"A lot of price investment was going into fuel offers," Wesfarmers finance director Terry Bowen said. "Clearly that's been redirected elsewhere.
"That's been one of the biggest sources of extra investment, that promotional dollar, if you like, has gone into lower everyday prices.
"A lot of that ended up in grocery in the last quarter."
Coles' headline food and liquor sales rose 5.8 per cent in the three months to $7.3 billion.
The cut in the fuel discount saw Coles Express' sales drop 2.3 per cent as comparable fuel volumes declined 4.6 per cent.
Most of Wesfarmers' other retail businesses had a good quarter, with Bunnings once again a stand-out with 11 per cent sales growth.
"They're pretty healthy numbers, frankly," managing director Richard Goyder said.
Target's woes continued with a sales slip of 4.6 per cent to $753 million, which Mr Goyder said reflected an ongoing transition away from discounting.
"It is frustrating in Target to not see at the moment the sales turnaround based on all the work we've done," he said.
"We see it in some weeks and we get slightly euphoric and then the following week puts us back down into place."
Mr Goyder said while the fashion retail sector was challenging because of online competition and international entrants, "there's no reason Target can't be as good as those businesses".
The Stuart Machin-led department store operator yesterday opened its first new Perth store in seven years, at the Cockburn Gateway Shopping Centre in Success.
Another new format Target opens next week in the northern suburb of Clarkson.
