Analyst Note| Johannes Faul, CFA |
We maintain our AUD 13.00 per share fair value estimate for no-moat-rated Coles. The key takeaway from Coles’ Investor Strategy Day is its e-commerce continues to outperform its brick-and-mortar food and liquor sales growth. But the online channel requires more capital to support this growth. Coles is currently on the back foot in terms of online sales penetration in food and liquor retailing compared with market leaders Woolworths and Endeavour, respectively. Coles’ management guided to a significant increase in capital spending in fiscal 2022 and beyond, most of which is earmarked to improve its digital capabilities and to renew its physical stores.