UPDATE 1-Wesfarmers' Coles Q1 sales up 7.3%, consumers wary

* Same-store sales up 6.1 pct

* Consumers worried by rising interest rates, fuel costs (adds details)

MELBOURNE, Oct 23 - Australian conglomerate Wesfarmers Ltd <WES.AX> reported 7.3 percent first-quarter sales growth for its Coles supermarket chain on Friday, but said consumer confidence was still fragile.

"Consumer sentiment is improving but customers remain value conscious," the company said in a slide presentation released to the stock exchange ahead of a seven-hour briefing of analysts.

Wesfarmers said double-digit volume growth in fresh food helped boost overall food and liquor sales, which advanced 6.1 percent at stores open for more than a year in the 13 weeks to Sept. 27.

But company executives told an investor briefing that rising interest rates and higher petrol prices were potentially a constraining factor on consumer spending.

"Consumer confidence is still a bit fragile," Coles managing director Ian McLeod told the briefing.

Australia's central bank raised official interest rates this month as the economy pulled out of a shallower-than-expected downturn, and signalled more rate hikes were on the way.

Wesfarmers also reported encouraging progress on its renewal strategy at Coles. It has overhauled 20 of its 763 supermarkets and plans to refurbish another 50 this year.

Elsewhere in the Wesfarmers group, sales at discount clothing chain Target rose 4.3 percent in the first quarter, with same-store sales up 1.8 percent.

At discounter Kmart, same-store sales declined 2.3 percent as stores exited unprofitable lines of goods.

Earlier this week, main rival Woolworths Ltd <WOW.AX> reported its Australian food and liquor sales rose 7.8 percent in the first quarter.