Coles will make a $146 million pre-tax provision in its first-half results as part of a distribution network overhaul that will cut both costs and jobs.
The supermarket giant, which was spun out of Wesfarmers and listed on the ASX in November, said on Thursday it has signed contracts with the local subsidiary of German-owned logistics firm Witron to develop two new automated ambient distribution centres.
The centres – one in Redbank, south west Brisbane, and the other in Kemps Creek, western Sydney – will replace three existing dry goods facilities in NSW and two in Queensland.
The provision is related to the costs of exiting leases and making redundancies at the existing distribution centres as they close over the next five years.
Coles did not immediately say how many jobs would be affected or how many would be created at the new centres, but a Coles spokesman confirmed the automated distribution centres would require fewer staff than those they are replacing.
Coles will spend a total $950 million on the centres – one in Queensland and one in NSW – 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.”
Coles shares dropped 15 cents to $12.44 at the open on Thursday, pulling them back down below their $12.49 listing price.
The supermarket chain will report its first-half results on February 19.