Coles Group

In 1914, the first Coles "variety store" was opened in Melbourne. Coles was founded in 1914 by George Coles when he opened what was called the "Coles Variety Store" in Smith Street in the Melbourne suburb of Collingwood.[4] More stores opened and the chain was regarded as the leaders in providing value to Australian shoppers. The building formerly occupied by the original Coles Variety Store is now the location of a Woolworths outlet – the major competitor to Coles.

Coles was run in succession by members of the Coles family from 1914 until the mid-1970s by the "famous five knights", brothers Sir George, Sir Arthur, Sir Edgar, Sir Kenneth and Sir Norman – known by their first initials – GJ, AW, EB, KF, NC.[5]

In 1960, the first supermarket was opened in the Melbourne suburb of North Balwyn and in 1973, a Coles store had been established in all capital cities of the country.

Kmart Australia Limited was born out of a joint venture between G.J Coles & Coy (Coles) and Kmart Corporation in the US. The first store opened in the Melbourne suburb of Burwood in 1969.

In 1978 Coles acquired full ownership of the Australian K-Mart operation and in 1994 bought back all shares Kmart Corporation held in Coles Myer. They are all trademarked under the Coles Group.

In Australia, BI-LO was established by John Weekes in Adelaide during the late 1970s. It was a major supermarket chain owned and operated by retail giant Coles Group in parallel to Coles Supermarkets. It had more than 200 stores in Australia. BI-LO stores were renamed as Coles.

A new head office opened in 1987 at Hawthorn East, Melbourne. As of 2008, it remained the head office for Coles Supermarkets and associated subsidiaries.

In 1996, BI-LO acquired the six-store Newmart discount supermarket chain in Western Australia which then became the equivalent to BI-LO in Western Australia. By August 2002, it grew to 16 stores before being transferred to the management and being re branded as Coles, though some stores were sold off to Foodland Associated Limited and became Action Supermarkets.

Coles Group Limited was listed on the Australian Securities Exchange with the code CGJ, which references back to its first ever registered company name of G.J. Coles & Coy Proprietary Limited. The company has in the past been listed on the NYSE (de-listed 6 January 2006), the New Zealand Stock Exchange (de-listed 1989) and the London Stock Exchange.

Sidney Myer arrived in Melbourne in 1899, working briefly at a drapery store before moving to Bendigo where he and his partner, Jacob Slonim, opened the first store in 1900. A second store opened in 1908. In 1911 Myer bought a drapery store in Bourke Street, Melbourne, which later became the flagship Myer store, the Myer Emporium. Myer expanded to Adelaide, acquiring a shareholding in Marshall's department store in 1925, later renaming this company as Myer SA Stores Ltd. Expansion across Australia followed. ( Coles owned many subsidiaries so the name was changed to Coles Group)

Both chains grew throughout Australia through growth and acquisitions, and both independently listed on the Australian Stock Exchange.

By the 1980s, Coles primarily operated supermarkets, whilst Myer (Myer Emporium Limited) operated the department store chains Myer and Grace Bros, as well as the Target discount variety store chain in Australia. In August 1985, the Myer Emporium Ltd and GJ Coles & Coy Ltd merged,[6] becoming the largest ever Australian Corporation.[7] The official name change to "Coles Myer Limited" followed in January 1986.

Coles Group was previously known as Coles Myer (1986–2006)

The office stationery chain Officeworks, based on the US chain Office Depot, was established in 1993 with the first store opening in the Melbourne suburb of Richmond in June 1994. This represented a successful introduction of a "category killer" – by comparison, around the same time Coles unsuccessfully attempted to negate the arrival of Toys "R" Us with the short-lived chain World 4 Kids.

In 1996, the operations of Target and Fosseys (earlier "Coles-Fossey") merged and the first Baby Target speciality store was opened, followed in 1998 by Target Home. In 1999, regional Fosseys stores were re-badged as Target Country, with metropolitan stores closed. Following Target's operating loss of $43m in 2001, the chain's format was repositioned to compete less with Kmart, Woolworths Limited's Big W, Harris Scarfe and The Warehouse, and more with Myer, with a focus on "middle class" quality products, especially clothing and home wares.

In 1998, Coles Myer opened the first Megamart store, in Coorparoo, Queensland. Harris Technology, a computer hardware and software reseller started by Ron Harris in 1986, was acquired in 1999.

By 2001, Coles Myer planned to expand the Megamart chain of furniture and electrical stores, but by 2005 had decided to divest the struggling chain. Six of the nine stores were sold to competitor Harvey Norman, with the remainder closed.

In 2001, the Company appointed John Fletcher, formerly of Brambles, as chief executive. Fletcher engineered a brief turnaround in the company's fortunes. Fletcher abolished the shareholder discount card, on the basis that it had eroded margins while providing little benefit, and was unpopular with institutional investors. Since their introduction in the early 1990s, the card had induced a tenfold increase in the number of Coles Myer's shareholders, with the overwhelming majority owning only small parcels of shares.

Fletcher also engineered the acquisition of the retail fuel operations of Shell Australia with the fuel outlets rebranded as Coles Express, allowing Coles Group to counter the success of Woolworths' discount petrol operation. Woolworths subsequently gained entry to part of Caltex Australia's network to provide a recognised brand for its fuel offer.

In August 2006, Coles announced that a group of private equity companies led by Kohlberg Kravis Roberts & Co. (KKR) was looking to buy the company, with an initial proposal of $14.50 per share. The Coles board rejected the offer stating it significantly undervalued the company, and was conditional on a due diligence process, without a guarantee that the deal would go ahead. A second proposal of $15.25 per share in October 2006 was rejected for largely the same reasons.[8]

In November 2006, long-term senior supermarkets executive Peter Scott was dismissed for an unspecified breach of the company's code of conduct.[9]

On 23 February 2007, the company announced a downgrade of expected earnings and that it was considering ownership options, including the possibility of a full sale of the business or restructuring such as a demerger.[10] On 20 March 2007, it deferred its plans to rebrand Kmart under the Coles banner and create supercentres, and subsequently paused its conversion of BI-LO stores to Coles Supermarkets given the lack of success of this move.

On 23 March, Coles Group stated it planned to sell its businesses as either an entire package, or in three parts (Officeworks, Target and the remaining businesses Kmart, Coles, Bi-Lo, Liquorland, Vintage Cellars and First Choice Liquor).[11]

On 3 April, Solomon Lew, the former chairman and long-time antagonist of the current board and management team, sold his 5.8% shareholding of the company. A large portion of these shares were bought by Wesfarmers, which was believed to be part of a consortium of bidders including Macquarie Bank, PEP and Permira. The share price at which the transaction took place was reportedly $16.47, then 2.2% above the market price. A bid for the entire company at this price would have valued Coles Group at A$19.7 billion, well above the two KKR proposals announced in 2006.[12]

In May 2007, Coles reported its slowest sales growth in at least seven years with continuing poor performance from Coles Supermarkets and Kmart.[13]

On 2 July 2007, Wesfarmers announced it intended to buy Coles Group for $22 billion, the largest take-over bid in Australia. The sale was expected to be completed in October 2007.[14]

In August 2007, Wesfarmers foreshadowed its plans for the restructuring of Coles Group following its anticipated takeover, including investment of A$5 billion, establishing three separate divisions (including a combined Bunnings/Officeworks "big box" retailing division), the possible sale of Kmart, and the exit of Coles Group from its head office base at Tooronga.[15]

The independent expert report published in October 2007, advising shareholders preparatory to the proposed sale was critical of the culture within Coles Group.[16]

At a shareholder meeting in Melbourne on 7 November 2007, shareholders voted overwhelmingly with 99.25% approval of the sale of Coles Group to Wesfarmers.[17] The Scheme of Arrangement between Coles Group and its shareholders was approved by the Supreme Court of Victoria on 9 November 2007, the last day Coles Group shares traded on the Australian Securities Exchange. The Scheme was implemented on 23 November 2007,[18] ending Coles Group as a company with its subsidiaries merged into Wesfarmers' business structure.[19]

• BI-LO: a budget supermarket chain. Until 2001, Bi-Lo traded as Newmart in Western Australia. In August 2006 Coles Group began to re-brand BI-LO stores as Coles Supermarket or divested them, but this activity was placed on hold in 2007 pending the sale of Coles Group.
• Coles SuperCentres were planned to open from September 2007, with many sourced from either existing Pick 'n Pay Hypermarkets or former 'Super K' stores, which were divided in the 1990s into separate Coles and Kmart stores. However these plans were put on hold in March 2007 pending the sale of Coles Group.[20] Then in August 2007, Wesfarmers CEO Richard Goyder said super centres would almost certainly not be part of the Wesfarmers approach after taking over Coles Group.[21]
• Harris Technology: Computer hardware and software reseller with a strong online presence, oriented towards corporate customers.
• Pick 'n Pay Hypermarket: two "hypermarkets" located in suburbs of Brisbane. (Rebranded to Coles and Kmart in late 2012)