Australia's largest retailer Coles Myer met analysts' expectations with a profit of A$354m ($193m) for the 12 months to 28 July 2002, a rise of 6.2 per cent, the company said yesterday. Sales were 8 per cent ahead to A$25.5bn. Last year's net profit was A$150.8 million.

Chief executive John Fletcher said momentum in Target and Kmart is continuing, and predicted that the turnaround of ailing department store division Myer Grace Bros is underway. Myer Grace Bros reported a $21.6 million earnings before interest and tax loss for the year. Margins were weakened by heavy promotion aimed at clearing slow-moving winter merchandise.

Positive signs for the general merchandise and apparel group were reduced inventory levels and improved stock-turns. Target delivered $51.7 million in EBIT, compared with a $2.8 million loss last year. K mart, however, reported a 20.6 per cent decline in earnings to $61.9 million.

In a flat overall market, investors pushed Coles Myer shares up 5 per cent. The stock finished the day 31¢ higher at A$6.43, its highest close in more than three months. This rise was boosted as a mystery buyer, believed to be the Solomon Lew-controlled Premier Investments, snapped up about one per cent of the retailer's stock.

Coles Myer director Mr Lew is believed to be buying share to ensure his seat on the board. Lew's re-election is opposed by most of his fellow directors because he opposes outgoing chairman Stan Wallis' strategy to streamline the company around its food and drinks businesses.

Stan Wallis plans to stand down as the retailer's chairman on 10 October allowing fellow director Rick Allert to take over as interim chairman until a permanent replacement is found.