SYDNEY (AFX-ASIA) – Coles Myer Ltd said it expects to introduce long-awaited fuel discounts for food and liquor customers by the end of July.

“There should be an anticipation that some parts of Australia would have a fuel offer before this financial year,” chief executive John Fletcher told a teleconference after the release of first half sales results.

Coles closes its books on July 28 each year.

The company, which had previously set a deadline of Christmas last year, is finalising talks with a major petrol supplier, he said.

He would not name the petrol partner, but said he does not expect an agreement to affect Coles’ existing loyalty program with Shell.

“I would not anticipate any change on fly-buys with Shell,” he said.

Some analysts have questioned how Coles could negotiate a fuel offer scheme with a supplier other than Shell, given their existing partnership.

Coles has put the conclusion of a fuel offer at the top of its priority list in a bid to bring back customers lost to major rival Woolworths Ltd, whose focus on fuel discounts wiped 2% off Coles Myer’s first half sales.

“That is 2% that we have lost off our trend that somebody else has gained,” liquor and food division chief operating officer Alan Williams said.

“Is fuel the whole answer? It’s a big part of it.”

Liquor and food sales slowed in the second quarter to 3.4% from 7.3% in the first, producing first half growth of 5.3%.

Group-wide sales slowed to 4.1% from 7.3%, producing first half growth of 5.5%.

Mr Williams said that over the past year, Woolworths has boosted the number of its branded petrol stations by 26 pct, doubled the base discount for supermarket shoppers to A$0.04 per litre of fuel, and intensified its marketing program. (US$1=A$1.7).

He said the delay in finalising a fuel partnership stems from a determination to get it right the first time and make sure it adds value for shareholders of both Coles and its new partner.

“It is a big deal. We’re talking billion dollar plus in fuel sales,” he said.

The company has also reviewed its marketing strategy as it attempts to eliminate the perception that its supermarket prices are more expensive than its rivals.