Australian store sees clothing upturn

Earlier this month, a boardroom dispute over whether or not to sell the department stores attracted the attention of the market watchdog, Australian Securities and Investment Commission, which publicly rebuked the company.

Coles Myer, Australia's largest retailer, has since shelved the department store sell-off plan to assess how they perform during the vital Christmas selling period.

It will take a fresh look at a possible sale in July 2003, the end of this fiscal year.

Rising shares

Coles Myer reported profits of A$354m (£123m; $193m) for the 12 months to 28 July 2002, a rise of 6.2% after one-off costs.

Sales improved 8% to A$25.5bn.

Its shares rose 3% after the retailer's profits met analysts' expectations and its own target of 6% annual growth.

Tough market

Chief executive John Fletcher said the outlook for the firm's non-grocery units was improving.

"Momentum in Target and Kmart is continuing, while at Myer Grace Bros the worst is behind us and the rebuild is underway," he said.

The food and drinks businesses have held onto their share of the market "in an extremely competitive environment", said Mr Fletcher.

However, food and drink margins weakened from 3.44% from 3.56%.

Mr Fletcher added that the food and liquor businesses were on track to meet their target of sales growth in the high single digits.

Divided views

Coles Myer plans to expand its presence in the grocery sector by opening 40 new supermarkets and 40 more liquor stores.

Coles Myer's board has been split by a row over future strategy.

Outgoing chairman Stan Wallis, who will step down in November, favours streamlining the company around its food and drinks businesses.

But a group of major shareholders - together with a number of the directors led by the former executive chairman Solomon Lew - opposed this.