Australia's Coles to rebrand, streamline business

MELBOURNE - Australian retailer Coles Myer Ltd has announced it plans to rebrand as Coles Group Ltd, comprising three businesss.

These would include a new everday needs business, placing food, liquor, fuel and general merchandise under one Coles brand.

Coles, which competes against Woolworths Ltd earlier this year sold its Myer department store business for A$1.4 billion ($1.7 billion).

The company's shares have added around 15 per cent this calendar year to Friday's close of A$11.70, while the broader market has gained about 4 per cent.

Coles Myer chief executive officer John Fletcher said the group would drive sales and earnings growth by further simplifying its business to invest in stores and customers' shopping experience.

Mr Fletcher said the retailer would spend A$850 million on more and better stores in the 2006/07 year, and would spend A$60 million on improving customer service in supermarkets.

Its Bi-Lo grocery brand will be converted to Coles and the retailer will launch new products, including housebrands.

Mr Fletcher said the group's 2005/06 guidance of a A$785 million net profit, before the sale of Myer, remained unchanged.

The profit on the sale of Myer was expected to be approximately $600 million.

"The group will also make a provision of up to A$300 million against FY06 earnings to largely cover the cost of strategic initiatives," Mr Fletcher said.

He said the comparative sales growth trend in the fourth quarter was continuing to improve in food and liquor.

- REUTERS