RNS Number:1599Q
Coles Myer Ld
25 September 2003

Coles Myer Ltd.

ABN 11 004 089 936

800 Toorak Road, Tooronga, 3146

Telephone (03) 9829 3111

Facsimile (03) 9829 6787

Postal Address: PO Box 2000, Glen Iris, 3146

News Release

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Thursday, 25 September 2003

                        UNLOCKING COLES MYER'S POTENTIAL

Coles Myer today updated the market on a program of strategic whole-of-company
initiatives designed to unlock the full potential of the CML group for customers
and shareholders.

Coles Myer CEO John Fletcher said transformation of CML's supply chain,
Information Technology, organisational culture and loyalty offering had each
been developed to leverage the unique competitive advantage of the group to
drive better value and service for customers and better financial returns for
shareholders.

"We believe Coles Myer as a group can be substantially greater than the sum of
the parts and through these strategies we can realise a unique competitive
advantage.

"Each and every strategic initiative discussed today has been built around
delighting our customers and delivering sustainable returns to our
shareholders."

Transformation of the CML supply chain would reap $425 million per annum in
benefits by the end of the five-year program, to be shared between customers and
shareholders.

"These benefits will build progressively over the five-year program, with a net
implementation cost in the early years.

"While there will be some fluctuation in capital spending as we go through the
early phases of the transformation, our average annual capex requirements
(excluding major acquisitions) will remain within the $800-$900 million already
flagged to the market.

"The supply chain benefits will contribute to our aspirational earnings goal of
$800 million by FY06," Mr Fletcher said.

Mr Fletcher said the supply chain initiatives were not about removing cost from
Coles Myer and putting the burden on our suppliers.

"They are about doing our business better for our staff, our customers, our
shareholders and our suppliers," Mr Fletcher said.

"Neither are these initiatives about cutting jobs. We are talking about growing
not shrinking our business and making it a better place to work, a better place
to shop and a better place in which to invest," Mr Fletcher said.

Key features of initiatives discussed today include:

Supply Chain:


  * BETTER for customers, SIMPLER for stores, CHEAPER for CML

  * Investment of $604 million over 5 years

  * Net benefits of $425 million pa from FY08.

  * Better systems to improve on shelf-availability for customers

  * Improved technology to simplify processes and reduce costs for suppliers
    and CML

  * Streamlined deliveries into stores

  * More efficient distribution network


    - best practice would see us move from 41 to c.24 distribution centres

    - no net reduction in jobs anticipated given forecast volume growth


  * Partnership with our people

  * Partnership with our suppliers

"Supply chain is a great example of where CML can truly leverage the scale of
the group. The strategy we have detailed today is better for our customers, for
our suppliers, and for CML." - John Fletcher.

Information Technology:


  * Refocussed on improving service to customers

  * Removing complexity and duplication of systems, effort and cost

  * Common technology across the brands - buy not build

  * Innovative new technology to enable CML to do business better

  * Governance - ensure we deliver on time, on budget

"Transforming IT will allow us to be more customer focussed in everything we
do." - John Fletcher.

Cultural change:


  * Recruiting the right people and developing them to be the very best at
    delivering what the customer wants

  * Building leadership capacity to position CML for the future

  * Aligning performance and reward with customer and shareholder goals

  * Creating a safer environment for customers and staff

"If we don't develop and motivate our people, if we don't develop the best team
we won't get there - it's that simple." - John Fletcher.

Loyalty:


  * Three-pronged program - fuel discount, revamped FlyBuys, CML MasterCard,
    with loyalty option

  * Rewarding ALL customers

  * Providing the best value

  * Competitive advantage

  * Leveraging our scale

"Our loyalty programs are part of our commitment to delight our customers -
we're doing that cost-effectively by leveraging the scale of the group." - John
Fletcher

Full presentations are available from Coles Myer's Corporate Website -
www.colesmyer.com

For more information:

Media:         Scott Whiffin      03 9829 5548

Analysts:      Amanda Fischer     03 9829 4521


                      This information is provided by RNS
            The company news service from the London Stock Exchange
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