Coles boss Leah Weckert says RBA interest rate rise ‘knocked’ shopper confidence

Coles chief executive Leah Weckert says while this month’s interest rate rise has knocked consumer confidence, the supermarket giant is yet to see the impacts on shopping behaviour at the tills.

Echoing similar comments made by her counterpart at rival Woolworths, Ms Weckert on Friday said cost of living continued to be a real challenge and consumers were looking for value week to week.

During the half, Ms Weckert said Coles lowered the price of hundreds of products as part of its winter and spring value campaigns and increased the number of products within its everyday value range. It also cut the price of several key fresh produce lines to $1 and offered more than 1000 half-price specials in the lead-up to Christmas.

“Coming into Christmas, we were actually seeing sentiment improving,” Ms Weckert told media on a call.

“With the interest rate rise that we saw earlier this month, that has knocked that confidence a little bit.

“At the moment we’re really seeing it in sentiment . . . I would say at the moment we haven’t seen any noticeable differences in behaviour, but it’s only been a couple weeks post the rate rise so it’s something to keep a close eye on as we move forward.”

Her comments come as Coles reported a 2.5 per cent increase in group sales to $23.7 billion in the 27 weeks to January 4, with profit down 11.3 per cent to $511 million as it included significant items related to prior staff underpayment issues.

Profit before the significant items jumped 12.5 per cent to $676m.

At its supermarkets, sales rose 3.6 per cent to $21.4b, with earnings growing 14.6 per cent to $1.2b.

The growth in supermarkets offset weaker sales in liquor, which recently completed a simplification program that saw Coles’ Vintage Cellars and First Choice Liquor Market chains folded into the better-known Liquorland brand.

Liquor sales declined by 3.2 per cent to $1.9b.

The results come the same day the blockbuster hearing on whether Coles has misled customers with sham discounts is set to wrap up on Friday.

During the 10-day hearing, Coles admitted to strong-arming suppliers and threatening to strip products from shelves if they refused to meet the supermarket’s pricing demands.

The Australian Competition and Consumer Commission alleged Coles systematically jacked up prices on everyday items, before offering discounts at prices higher or equal to the original shelf life.

The famed “Down, Down” discounts on everything from biscuits to dog food tricked shoppers into thinking they were getting value for money, the ACCC claimed.

Barrister Garry Rich SC, acting for the ACCC, gave the court the example of Coles’ pricing of Nature’s Gift wet dog food.

The product sold for 10 months at $4, then was bumped up to $6 for a week before a reduced to the “Down Down” price of $4.50, the court was told.

Coles told the court underlying inflation was to blame for pushing up prices higher.

Woolworths is also facing allegations from the competition watchdog of misleading customers with its discounts, and its case will be heard in April and May.

The legal actions, launched in September 2024, came amid continued backlash from customers about higher prices for a basket of groceries.

Both Coles and Woolworths have face increased regulatory scrutiny and been forced to front multiple government inquiries into claims of profiteering.