Research Project

Introduction

• Coles & Woolworths financial data from the previous three years was analysed to assess Coles’ historical performance and market position.
• Methods included: horizontal & vertical analysis, profitability & efficiency ratios, liquidity & capital structure ratios, market performance ratios, DuPont analysis, and forecasting.

Horizontal Analysis — Key Points

• Sales Revenue:
  • Increased from $39,369M (2022) to $43,571M (2024).
  • Growth of 2.8% in 2023 and 7.6% in 2024.
  • Driven mainly by supermarket revenue increases and slight growth in liquor sales.
  • eCommerce supermarket sales grew 30.1%, boosted by major events like Black Friday, Christmas, Easter, and Coles Online’s 25th birthday.

Vertical Analysis

• Compares Coles’ cost structure and profitability margins over 3 years.
• Shows stable cost of goods sold (COGS) percentages.
• Improved gross margin in 2024.

Key Ratios

• Profitability Ratios
  • Gross Profit Margin, Net Profit Margin, ROA, ROE (values in report).
  • Notable improvement in ROE in 2024 due to higher net income.
• Efficiency Ratios
  • Inventory turnover and asset turnover stable, with slight efficiency gains in 2024.
• Liquidity & Capital Structure
  • Current ratio, quick ratio indicate stable short-term liquidity.
  • Debt-to-equity ratio shows moderate leverage.
• Market Performance Ratios
  • EPS, P/E ratio trends compared between Coles and Woolworths.

DuPont Analysis

• Breaks ROE into profit margin, asset turnover, and equity multiplier.
• Shows ROE improvement driven more by higher margins than leverage.

Competitor Comparison (Woolworths)

• Woolworths maintained slightly higher sales revenue.
• Coles outperformed in online sales growth rate.
• Woolworths had stronger EPS and slightly higher gross margin.

Evaluation & Conclusion

• Coles has shown consistent growth in revenue and eCommerce performance.
• Opportunity exists to further improve operational efficiency.
• Forecast suggests continued growth in 2025.

View Full Report (PDF)