By Stuart Condie

SYDNEY--Coles Group Ltd. will focus the majority of its 1.4 billion Australian dollars (US$1.07 billion) of fiscal 2022 capital expenditure on efficiency measures that include automation of the supermarket chain's distribution centers.

Coles on Thursday said about 60% of fiscal 2022 capex would be focused on improving efficiency, with the remainder split roughly equally between growth, maintenance and the implementation of 50 store renewals and 20 new stores.

It expects depreciation and amortization of between A$1.67 billion and A$1.72 billion, while automation assets supplied by Witron Logistik + Informatik GmbH and Ocado Group PLC will begin to depreciate in the 2023 fiscal year.

In 2019, Coles engaged Witron to build two automated centers as part of a move to prioritize spending on initiatives that drive long-term earnings growth. It hopes to make its supply chains more efficient and increase home delivery services.

Its most recent quarterly sales fell by 5.4% on-year, but that was compared with a period in which sales were inflated by pandemic-driven hoarding.

Citi this week said it expects Coles to close out fiscal 2021 by delivering comparable sales growth of 0.1% over the three months through June, compared with a 0.7% decline across an industry including larger ASX-listed rival Woolworths Group Ltd.

Write to Stuart Condie at stuart.condie@wsj.com

(END) Dow Jones Newswires

06-16-21 1940ET