Coles Myer Q4 sales up, may sell Myer

MELBOURNE - Australia's largest retailer, Coles Myer, today reported a 10.7 per cent rise in fourth-quarter sales, boosted by increased food, liquor and petrol sales, and said it may sell or spin off its Myer department stores.

Coles Myer, which owns Coles supermarkets, the Myer stores and Target and Kmart discount stores, said it was on track to meet its full-year target of around 17 per cent earnings growth, as well as a target of an A$800 million ($879 million) profit in 2006, a goal set out four years ago.

Coles Myer has decided to sell its nine Megamart electrical and furniture stores, which are expected to report a full year loss of about A$35 million in earnings before interest and tax.

Coles said it would make a provision of A$56 million after tax to cover the costs of the Megamart sale."

Chief Executive John Fletcher said the company was looking at the ownership of the Myer stores as part of its new five-year strategy.

The group has about a 35 per cent share of the grocery market, where it competes against Australia's largest supermarket operator, Woolworths Ltd.

Its Myer department stores compete against David Jones Ltd. .

Despite a tough fourth-quarter, when higher interest rates and petrol prices pinched shoppers and unusually warm weather cut demand for winter clothes, sales for the 14 weeks to July 30 rose to A$9.51 billion from A$8.59 billion a year ago.

"This is a very strong result, particularly given the tighter trading conditions experienced across the retail sector this calendar year," Fletcher said in a statement.

Coles Myer, which reports its annual results next month, has previously forecast fiscal 2005 net profit after tax of between A$670 million and A$680 million, after a range of one-off restructuring costs.

Its shares, which closed at A$9.85 on Monday, are little changed from the start of the calendar year while the broader market has added 10 per cent.

- REUTERS