Supermarket fails to roster enough staff

Coles is under-investing in weekend staffing levels compared to Woolworths, which could be dragging on the newly listed supermarket chain’s profit, analysts say.

In a note this week, UBS retail analyst Ben Gilbert said recent “store walks” and industry feedback suggested Woolworths staffing levels were “noticeably higher” on weekends.

That was consistent with a prior UBS labour study suggesting Coles had on average three fewer staff per store compared with Woolworths, Mr Gilbert said.

“Our store walks suggest Coles may need to invest more in weekend service levels, particularly relative to Woolworths,” he said. “We estimate the labour investment gap as a percentage of sales could be up to 100 basis points with every 10 basis points to labour cost margins an estimated 2 per cent drag to group earnings.”

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UBS has maintained its sell rating for Coles and Coca-Cola Amatil, citing the supermarket’s recent commentary on weaker soft-drink sales through its convenience channel in the first half of the financial year, combined with less favourable weather conditions.

The investment bank maintains its buy rating for Woolworths and produce wholesaler Costa Group, off the back of increasing prices for blueberries, raspberries and tomatoes after weakness through November to January.

Coles shares are down 36 cents to $12.48, or 2.8 per cent, since the company listed on the ASX at $12.84 in November last year after being spun off by parent company Wesfarmers.

The supermarket declined to comment on the UBS analysis ahead of its first-half financial results announcement on Tuesday. Woolworths is due to report its results the next day.

Source link Business News Australia

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