Coles sales figures fail to impress

Shares in Wesfarmers have fallen following the release of March quarter sales figures. Source: AAP

SHARES in retail group Wesfarmers dropped more than two per cent after the Coles supermarket owner's latest sales fell short of investor expectations.

Sales from Coles supermarkets and liquor stores rose 3.9 per cent during the March quarter to $6.7 billion.

And it was a mixed quarter for Wesfarmer's other retail businesses, with strong results from Bunnings and Officeworks offsetting weakness at Target and Kmart.

IG market strategist Evan Lucas said the sales figures were not enough to meet market expectations after several years of strong growth.

"It was a very stock-standard Wesfarmers result," he said.

"The result was still good, but it wasn't enough to drive it (Wesfarmers) to that all-time record high."

Wesfarmers shares fell 88 cents, or 2.01 per cent, to close at $43.01 after the company's latest quarterly figures were released on Tuesday.

The stock has recently been trading around the record high of $44.60 it reached in November 2013.

CMC chief market analyst Ric Spooner said the slide in the share price came after several weeks of gains and probably reflected unrealistic expectations from investors.

"I'd characterise it more in terms of the market having set a really high bar," he said.

"So it might reflect a marginal disappointment but I don't think there are really any serious concerns," he said.

Bunnings lifted sales more than 12 per cent to just over $2 billion during the quarter, while Officeworks recorded a near seven per cent rise in its sales.

But Kmart managed only a 0.4 per cent rise in sales and Target continued to struggle, with sales down 3.6 per cent.

Wesfarmers chief executive Richard Goyder said the weak performance from Target was partly the result of price reductions linked to efforts to turn around its performance.

Mr Goyder also said he was not worried about a possible slide in consumer spending following the federal budget in May.

Economists fear the Abbott government's first budget, which is expected to include spending cuts and higher taxes, will lead consumers to tighten their purse strings.

"One of the things that attracted us to Coles was the fact that through different phases of an economic cycle the food business is pretty resilient," Mr Goyder told reporters.

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