Coles (COL) $16.22

COL +0.31%: The supermarket giant released a 3Q trading update today to mixed reviews, though the important aspects seemed largely positive. Sales for the supermarkets side was up 4.2% on a like-for-like basis, slightly ahead of expectations. The growth came despite slowing food inflation, down to 2.9% and industry data suggests Coles picked up some market share in the quarter. Liquor was weak though, down -3.1%, likely hurt by New Year’s Day timing which fell in 2Q this financial year while the trend for liquor seemed to be consistent throughout the period based on guidance at the 1H result. Coles also commented that top line was likely impacted by a fall in bulk purchases which may lead to improved margins for liquor. According to the update, volumes have remained solid into 4Q while measures to reduce stock loss have proven fruitful thus far, i.e. less theft.

• The 2Q update reads largely positive for COL, though we want to see further proof of execution near-term.