Supermarket chain Coles face ‘enormous’ supply chain issues

Coles Group chief executive Steven Cain said employees and suppliers are working heroically to navigate unprecedented supply chain issues but he expects the challenges will last a couple of years.

So far this year the supermarket chain has faced staffing issues from COVID-19, a shortage of shipping pallets, trouble finding qualified drivers given immigration restrictions, and widespread flooding that disrupted rail traffic to Western Australia and the Northern Territory and forced 130 stores in NSW and Queensland to temporarily close.

“I can’t ever recall a period where the disruption was that extensive, and that was off the back of a good solid Christmas trade, where the supply chain was already under pressure,” Cain told analysts on Wednesday morning.

“And it’s really been a compounding effect, and that takes time to unwind, not just our suppliers, but also in the market more broadly.”

“We’re focused on making sure that our customers get the products that they want, but it does take time for a level of disruption that is so enormous, for everything to be get back where it needs to be,” he said.

It’s not just a Coles issue, or even a retail food industry issue, he added.

Coles’ staff, third-party providers, carriers and subcontractors have made incredible efforts to keep stores stocked and open, said Cain, who on Tuesday visited a Coles in Queensland that had been hit by flooding.

“The continued focus on serving the community and customers, we should really reflect and congratulate them on the effort they’ve put in,” he said.

Despite the challenges the listed company managed to lift sales and revenue during the first three months of the year, with a 3.9 per cent increase in retail sales in the quarter to $9.3 billion, compared to the same period last year.

Sales were elevated especially in early January as the Omicron variant spread, Coles said.

Sales revenue rose by 3.6 per cent to $9.1 billion, according to the company’s third-quarter sales results.

Pandemic-related costs peaked at about $30 million in January, driven by staff isolation requirements in stores and distribution centres, and costs linked to virus testing.

At 1143 AEDT, Coles shares were up 0.1 per cent to $18.38.

with news from AAP