October 28, 2019 / 10:15 PM / a month ago

CORRECTED-UPDATE 1-Australia's Coles Group Q1 supermarkets same-store sales growth slows

(Corrects first paragraph to show comparable sales growth, not sales, slowed)

Oct 29 (Reuters) - Australia’s Coles Group reported a slowdown in comparable sales growth at its supermarkets division, as a boost from a popular promotional campaign wore off while severe drought in the country also hurt the retailer’s performance.

The country’s second-largest grocery chain posted same-store sales growth of 0.1% at the supermarkets division on Tuesday, down from a growth rate of 5.1% reported last year.

Coles said it faced difficulty in replicating the strong comparable sales growth from last year driven by its “Little Shop” promotional campaign due to increased promotional activity by rivals.

The retailer faced stiff competition from larger rival Woolworths, which ran a similar highly successful campaign that gives away toys based on characters from the Disney film “Lion King”.

Meanwhile, the long-term impact of a severe drought contributed to price inflation of 1.4% for the quarter, Coles said, in line with the preceding quarter.

The supermarkets business, which accounts for most of the group’s earnings, posted sales of A$7.71 billion ($5.27 billion) in the 13 weeks ended Sept. 29, slightly higher than the A$7.59 billion it earned a year earlier.

The group’s total sales, which comprises supermarkets, liquor and fuel & convenience retail businesses, rose 1.8% to A$8.70 billion.

Woolworths is expected to report first-quarter results on Wednesday. ($1 = 1.4622 Australian dollars) (Reporting by Rashmi Ashok and Aby Jose Koilparambil in Bengaluru; Editing by Shounak Dasgupta and Shailesh Kuber)

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