Coles ain't Aldi?
The AFR reported that Macquarie and Goldman Sachs have mixed reviews on Coles' solo outlook post its demerger from Wesfarmers. Macquarie is cautious about Coles' plan to spend about $1 billion on two automated distribution centres, which will increase net debt to EBITDA from 0.7 to 1.1 times. The bank is also wary about the impact of new competitors, stating that "Kaufland could obtain around 1% market share quite quickly." On the other hand, Goldman Sachs expects Coles to grow earnings by increasing sales of fresh food and private label, shifting away from promotions to everyday low prices, opening new stores and cutting supply chain costs. This all sounds very familiar.