COLES has pointed the finger at its petrol supplier, Viva Energy, for lifting the prices it charges the supermarket heavyweight following a 20 per cent plunge in fuel sales.
It comes as sales growth in its key grocery business all but grinds to a halt as Woolworths ups its game and Aldi expands its footprint.
Like-for-like food and liquor sales at Coles rose a meagre 0.3 per cent during the three months to March, compared with the same quarter a year ago, an update from parent group Wesfarmers revealed yesterday.
It was the weakest sales growth posted by the supermarket chain since Wesfarmers bought the business almost a decade ago.
The amount of fuel sold at the group’s 698 Coles Express service stations tumbled 20.7 per cent.
Like-for-like sales volumes — a measure that strips out the impact from petrol stations that have opened or closed — were down 16 per cent.
Coles managing director John Durkan said the retailer was being forced to pay more for the fuel it bought from Viva.
“We’ve had to reflect some of that at the pump, which has had some effect on volumes,” Mr Durkan told analysts.
“We’re in dialogue with our partner and I expect to be able to cycle our way through this over the fullness of time. You have to give us time to work this out.”
Viva, owned by Dutch commodities trading titan Vitol, became the exclusive supplier to Coles when it bought Shell’s service station network in 2014.
It also bought the rights to use the Shell brand.
Viva declined to respond to questions from Business Daily, saying its arrangements with customers were private.
A detailed review of Coles petrol offering commissioned by the Herald Sun last month found its unleaded petrol was 4c-a-litre higher than rivals across Melbourne, Sydney and Brisbane.
Outgoing Wesfarmers chairman Richard Goyder dismissed the suggestion Coles was looking to fund its investment in cutting prices and improve service at its core supermarket business by lifting pump prices. “It’s (fuel) a really low-margin business — that won’t do it for you,” he said.
Wesfarmers problem child Target continued to lose ground, with headline sales plunging 18.1 per cent to $555 million, offset by a 2.5 per cent rise in sales at Kmart to $1.1 billion.
Extracted from Courier Mail.