Coles Group delivered earnings growth of 9.9 percent in FY26 (excluding significant items), a notably resilient outcome given the persistent cost-of-living pressures and regulatory headwinds facing Australian retailers. The group’s group EBIT of $2,322 million and NPAT of $1,090 million (excluding $165 million after tax from a Fair Work Ombudsman judgment) demonstrate that disciplined execution and strategic investments in automation and digital capabilities are translating into tangible shareholder value. Against an operating environment characterized by muted sales growth of 2.8 percent across the group, the outperformance in earnings illustrates improving operational leverage and cost management.
The standout performer was Supermarkets, which grew EBIT by 12.2 percent while expanding margins by 43 basis points despite sales growth of only 5.1 percent excluding tobacco. This margin expansion is particularly significant in an inflation-constrained cycle where retailers typically face pressure on unit economics. The company’s Simplify and Save to Invest (SSI) program delivered $311 million in benefits during the year, funding both operational improvements and customer-facing investments that are proving effective in driving market share. Management has confirmed that Coles gained supermarket market share during the period, a competitive outcome that matters considerably in an industry where scale drives profitability and negotiating power.
The digital business is scaling with meaningful profitability metrics emerging. eCommerce sales grew 26.4 percent to $5.6 billion, with customer fulfilment centers achieving EBITDA positive status in their second year of operation. The expanded partnership with Uber Eats for immediate delivery is contributing to this momentum. For investors, these metrics suggest that the substantial prior capital invested in digital infrastructure is beginning to generate returns, a prerequisite for sustained competitive advantage in retail. The inclusive Exclusive to Coles brand sales growth of 6.1 percent also points to successful execution of the higher-margin private label strategy.
The dividend was increased to 78 cents per share (up 13 percent) and fully franked, signaling management confidence in cash generation and capital management. This level of payout is sustainable given the group’s balance sheet strength, which management specifically highlighted as favorable for FY27. The path forward involves an accelerated store opening and renewal program alongside a turnaround strategy for the underperforming Liquor business, suggesting management recognizes the need for capital deployment to sustain growth momentum. Investors should monitor execution against these initiatives, cost inflation pressures on both supply and labor, the sustainability of margin gains, and whether the Liquor division strategy delivers the intended uplift. This announcement is price sensitive and flagged as material by the ASX.
View the full ASX announcement (PDF)
About Coles Group Limited (ASX: COL)
Coles Group operates one of Australia’s two major supermarket chains along with liquor retail and convenience store businesses. It serves millions of Australian customers weekly across its store network.
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