Coles Group Faces Additional Costs and Delays in Fulfillment Center Construction

Coles Group, the Australian supermarket operator, has announced that it will face additional costs of AUD 120 million due to construction delays in two new automated fulfillment centers. The company stated that its center in Victoria state, developed by Ocado Group, will commence initial operations in the middle of its 2025 fiscal year, a year later than originally planned. Similarly, the center in New South Wales state, also being developed by Ocado, will begin operations at the end of fiscal 2024 instead of the expected second half of fiscal 2024.

As a result of these delays, Coles estimates that there will be a AUD 70 million increase in capital expenditure and a AUD 50 million increase in operating expenses. The overall cost of the project, aimed at reducing costs and enhancing efficiency, is now projected to be around AUD 400 million in capital expenditure. By the end of fiscal 2023, the company had already incurred 55% of this cost, with the remainder to follow over the next two fiscal years.

Overall, Coles Group is working diligently to address these challenges and remains committed to delivering these new fulfillment centers as part of its strategic growth plans.