Cole's losses benefit FoodWorks

Independent supermarket group FoodWorks' A$15 mln (€9.1 million) members-only capital raising is set to close this week, providing funds to accelerate its assault on a market dominated by Coles and Woolworths.

''Independent retailers have gained a reasonable proportion of the market share that Coles has lost,'' said Chairman, John Bridgfoot. He also said that he expected a strong response to the fundraising, with independent supermarket retailers reaping the benefits of Coles Group's poor performance.

Coles' food and liquor division last week reported sales growth of just 0.8% in the three months to the end of April, or a decline of 2.2% once inflation is taken into account. This compared with same-store sales growth of 6.6% at Woolworth's food and liquor division in the fourth quarter, or 3.6% in real terms.

The group aims to double its portfolio of 378 branded stores over the next three years as well as double its annual retail turnover, currently running at about A$42 mln (€25.6 million), within five years. However, Bridgfoot acknowledged that Coles, which is currently up for sale, is unlikely to keep ceding market share to competitors once new owners take control.

The company, currently run as a not-for-profit group, provides buying, branding and support services to its owner-members, and is offering up to 15 million new shares at A$1 (€0.61) each. The funds will be used to buy property for new stores, refurbish and expand existing stores, recruit new independent retailers to the group and further develop its generic grocery brands and administrative systems. The shares are only available to owners of FoodWorks' 708 member stores and related parties, with final shareholder numbers expected to top 1000.

FoodWorks store owners, each of whom currently own one share in the company, voted in March to fund the capital raising themselves rather than pursue an initial public offering, fearing the influence of external investors on the company's operation. However, Bridgfoot said the stock would probably be listed on either the Newcastle or Bendigo stock exchanges in order to allow shareholders to trade between themselves.