Retail analysts on average expect Coles to announce net earnings before one off items of about A$285 million for the six months to January 24, 1999 compared to A$261.3 million for the six months to January 26, 1998.

Most forecasts were bound in a narrow range between A$280 million and A$290 million.

``The narrow range isn't surprising because sales have tended to be a good indication of what happens with profit in recent years,'' said a Sydney-based analyst who asked not to be named.

The analyst said investors would be more interested in comments from the company's chief executive Denis Eck about whether price competition between Coles and its main domestic competitor in food and liquor retailing, Woolworths Ltd, had intensified since the end of 1998.

``There has been more evidence ofprice competition in the past three months than in the past three years and I think some investors are worried Coles could lose some of the gains on margin that it has made since Eck took over,'' the analyst said.

Eck has been reluctant to make earnings predictions for the group but has said Coles could expect to match its 1997-98 earnings and sales growth of seven per cent as long as there were no major changes in domestic employment and consumption levels.

The Australian economy bubbled along nicely during the company's first half, the impact reflected in the group's 9.3 per cent stronger half year sales of A$11.608 billion after a busy Christmas and holiday trading period.

Spearheading sales growth was a 13.1 per cent increase in revenue for the group's food and liquor retailing business which includes its Coles and Bi-Lo supermarkets, Liquorland, Vintage Cellars and Red Rooster fast food chain.

Coles' general merchandise division, which encompasses KMart, Officeworks and World 4 Kids, achievedsolid sales growth of 7.4 per cent in the first half, which analysts say was driven by a steady growth from KMart and a strong performance by the smaller Officeworks unit.