Coles Group, Australia's second-largest supermarket retailer, on Thursday set a June 25 date for final bidding for the company as it reported a tiny 0.6% rise in third quarter sales.
Coles, which put itself up for sale in February, also said conglomerate Wesfarmers will start checking its books starting May 25. That's the day the two-week exclusive period of due diligence of a private-equity consortium led by Kohlberg Kravis Roberts expires.
Wesfarmers last month offered A$19.7 billion for the retailer. A potential third bidder, Britain's Tesco, decided last week not to pursue an offer.
Coles reported sales from continuing operations in the 13 weeks to April 29 rose to A$8.4 billion (US$6.9 billion). By comparison, main rival Woolworths, reported an 8.8% increase in the quarter to A$10.56 billion.
"It's a pretty dire retail result," said ABN Amro Asset Management analyst Matthew Hoult. "With inflation running at 3%, the implication is that volume comparisons are seriously negative, which in a retail environment is the last thing you want to see happening," he said.
Coles shares were little changed after the results.
ABN AMRO analysts had forecast like-for-like sales growth of 2.1%, while JPMorgan had forecast a 2.2% decline.
Coles said comparable sales in its core food and liquor business rose 0.8%, which it said was in line with its expectations.
The retailer said cost-saving initiatives and moves to improve the fresh food offering were having a positive impact, but were introduced too late in the quarter to be reflected in the result. Coles has struggled since the failed conversion of its discount Bi-Lo supermarkets to the Coles brand.
It left its forecast of steady net profit for the year unchanged. Total comparable store sales fell 0.9%.
"The worst is now behind us and we look forward to a gradual improvement in sales in the fourth quarter and beyond," said Coles Chief Executive John Fletcher.
Among Coles' units, discount retailer Kmart which is being sold with the core business had comparable sales drop 3.2% in the third quarter. At discount clothing chain Target and business supplies chain Officeworks, comparable sales rose 1.3% and 1.6%, respectively. Both chains are keenly sought after by Woolworths, which is expected to team up with one of the
two main bidders but has yet to declare its hand.
Coles shares have jumped 22.6% since the company put itself up for sale in February.