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Tuesday 18

December, 2018 2:25 AM



Coles gets a little boost from Little Shop

Coles gets a little boost from Little Shop

Coles' The Little Shop campaign has seen it outperform Woolworths in sales growth for the first time in two years, but analysts predict the windfall won't last.

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By AAP 27.09.2018 08:30 AM

Tiny collectable toys have lifted Coles' earnings one per cent at the expense of rival supermarket Woolworths, but the short-lived boost is unlikely to last.

Analysts from Citi estimate Coles' sales grew by five per cent during The Little Shop eight-week campaign, beating Woolworth's for the first time in two years.

They estimate Coles has reaped an extra $200 million in sales growth and net earnings - before interest and tax - of $10.8 million.

In a report, Citi analysts said Coles had experienced a "remarkable turnaround" in sales growth for the first quarter of 2019.

"Coles Little Shop Campaign exceeded even our optimistic expectations," Citi said.

"This has come at the expense of Woolworths, where like-for-like sales growth is likely to moderate to 1.5 per cent."

The thirty miniature replicas of popular Coles' products - including Tim Tams, washing powder and jars of Vegemite - have been a hit with children and adults alike.

They have even spawned a Facebook swap-group with more than 23,000 members.

Coles has also benefited from a free plastic bag giveaway, analysts say, as it transitioned to a total ban on single-use plastic bags.

But Woolworth's is predicted to bounce back in the second quarter of 2019.

Wesfarmers is set to spin-off Coles into a separate company later this year.

Shares in Wesfarmers closed on Wednesday up 33 cents, or 0.70 per cent, at $49.75.

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