Coles gained the upper hand in its battle for the number position with Woolworths as the number one supermarket by reporting on Thursday a yearly sales growth of 6.1 per cent to $33.7 billion.

It is the twelfth consecutive quarter that Coles, owned by Wesfarmers, triumphed over Woolies in sales growth from existing outlets.

Although Coles logged a 3 per cent sales growth for the fourth quarter of its financial year that ended June but below analysts' expectation of 3.2 per cent, it was better than Woolworth's 1.3 per cent growth rate for the same quarter.

The strong performance of Coles was despite a 4 per cent price deflation for the fourth quarter caused by lower prices of fresh food and heavy discounts offered by the supermarket giant.

"High growth in sales volume during the fourth quarter continued to demonstrate the momentum of Coles turnaround. Higher volumes reflected good growth in the number of customers shopping at Coles and bigger shopping baskets," Coles Managing Director Ian McLeod said in a statement.

Wesfarmers-owned Bunnings, its hardware division, also registered a 2.9 per cent comparable-store sales growth while Target, its discount department store, reported a 2.1 decline in sales for the whole year but logged a 4.5 per cent boost for the fourth quarter due to its yearly toy sale.

"Customers are responding positively to the introduction of the Target Essentials range, improvement in service levels, better communication of Target's value and an expanded online offer," said Target boss Dene Rogers.

However, the strong numbers failed to lift Wesfarmers shares which even fell 13 cents or 0.41 per cent to $31.85 by 10:25 a.m.

Peter Warnes, head of research of Morningstar, said he expects Wesfarmers share price to pick up after the company releases more comments about its performance amid the challenging retail environment.

"Coles and Bunnings have quite robust numbers which have got to indicate they are confident they can grow the business," The Herald Sun quoted Mr Warnes.

RELATED STORIES