Coles
Myer Limited announced results yesterday.
Sales were slightly down on market expectations; up 1.5% on a same store
basis against slightly higher market expectations. The high points appear to be the soon to be
divested Myer, where sales rose by 7.9% to $674m for the quarter, and the price
related jump in fuel sales through Coles Express.

The
way forward for Coles seems unclear. Although CEO
John Fletcher said yesterday that the gap between Coles and Woolworths was
narrowing, I think he means that the Woolies tail lights are no longer vanishing
into the distance and that now they can see there are two lights on the
back of the truck, not one. Coles have
not made major inroads into the Woolworths dominance in the food and liquor
space. They are about to lose Myer, just
as it starts kicking goals. Fletcher
will announce a new five year plan later this year.

We
hear reports from suppliers who visit head offices of Coles and Woolworths
telling of an atmosphere with elements of frantic panic at Coles’ head office;
contrasting with an air of assured and purposeful calm at
Woolworths.

Coles
has handed the Australian retail crown
to Woolworths where it will shortly be used in the coronation of a new king to
replace Roger Corbett –
and the reports that
Michael Luscombe was to assume the throne proved correct.

This
morning Woolworths announced
that Luscombe will wear the crown from 1 October, and assume the transitional
role of Chief Operating Officer from 1 June.
Other consequential management changes will be announced shortly. Nothing radical, no sharp corners and no need
to re-invent anything – just a logical succession, accompanied by a rise in
Woolworths share price that is about the same as this morning’s fall in the CML
price.

Peter Fray

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