Coles to make $146m provision for distribution network overhaul

Supermarket giant Coles plans to make a $146 million pre-tax provision in its 2019 interim results as part of an overhaul of its distribution network.

The supermarket giant has signed contracts with Witron Australia to develop two new automated ambient distribution centres to replace three existing dry goods facilities across Queensland and New South Wales.

The provision is related to the costs of exiting leases as well as redundancies from the closure of existing distribution centres over the next five years.

The two centres, one of which will be based in Redbank, south west Brisbane, and the other in Kemps Creek, western Sydney, will cost Coles a total of $950 million over six years.

“With the signing of these important contracts, Coles is one step closer to implementing a key element of its supply chain modernisation strategy,” Coles chief executive Steven Cain said.

“This will provide a safer working environment for our team members, lower supply chain costs, enhance our overall business competitiveness and make life easier for our customers by having the right offer in the right location.”

The supermarket chain, which was spun off from Wesfarmers and listed on the ASX last November, is due to  report its first-half results on February 19.

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