Coles Group H1 Earnings Call Highlights

27 Feb 2026, 01:10 by Sarita Garza · The Markets Daily

Coles Group (ASX:COL) executives highlighted strong supermarkets earnings growth, continued sales momentum and a sharp lift in customer satisfaction as the company delivered its half-year results in a “competitive operating environment,” Managing Director and CEO Leah Weckert told investors.

Weckert said e-commerce was a “key contributor again,” with supermarkets online revenue up 27% during the half. She also pointed to tangible benefits from automation programs and cost reduction efforts, including AUD 133 million in savings delivered through the company’s Simplify and Save to Invest (SSI) program.

Half-year financial performance and dividend

Chief Financial Officer Charlie Elias said the group reported sales revenue of AUD 23.6 billion, up 2.5%. Excluding significant items, group EBITDA rose 7.8% to AUD 2.2 billion and group EBIT increased 10.2% to AUD 1.2 billion. Elias added that NPAT, excluding significant items, increased 12.5%.

On the back of the results, the board declared a fully franked interim dividend of AUD 0.41 per share, up 10.8% versus the prior corresponding period. Elias said the company would retain a franking credit balance of about AUD 600 million after paying the interim dividend.

Supermarkets: sales growth, margin expansion, and customer metrics

In supermarkets, Elias said sales revenue rose 3.6%. Adjusting for competitive industrial action in the prior corresponding period and excluding tobacco, supermarkets sales revenue increased 6.1%. Supermarkets EBIT increased 14.6%, supported by top-line growth and EBIT margin expansion of 55 basis points to 5.8%, which Elias said was underpinned by a 65 basis point increase in gross profit margin.

Management attributed the gross profit margin improvement to several factors, including annualized benefits from automated distribution centers (ADCs) and Kemps Creek’s ramp-up, strategic sourcing and SSI initiatives, and growth in Coles 360 (which Elias said delivered double-digit growth during the half). Lower tobacco sales also contributed to gross profit margin, which Weckert and management later noted remained a drag on reported sales; Weckert said sales trends in tobacco had been “pretty consistent” over the past six months, with only marginal and temporary improvements following enforcement crackdowns in some states.

Weckert said customer satisfaction improvements across the business were a key highlight, with gains in quality, availability, store look and feel, and price. In Q&A, executives said the improvements reflected a combination of operational focus and benefits flowing through from investments such as ADCs, customer fulfillment centers (CFCs), and an expanded store renewal program.

Quality: Chief Commercial and Sustainability Officer Anna Croft described a fresh transformation program spanning supplier partnerships, added technical resources, changes to the meat network to bring production closer to stores, and increased training for store and central teams.
Availability: Chief Operations and Supply Chain Officer Matt Swindells said supplier inbound fulfillment was at a six-year high, supported by operational model changes, increased utilization of ADCs and CFCs, rollout of a transport management system, and growing use of data and AI to identify out-of-stocks before they occur.
Store look and feel: Croft cited a higher pace of renewals compared to earlier years and changes aimed at easing navigation and reducing omnichannel friction in stores, including checkout space improvements through a service transformation program.
Price perception: Croft said price is typically the slowest customer metric to shift, and pointed to fewer, deeper promotions and expanded everyday low pricing (EDLP) in targeted categories.

Digital growth and loyalty: e-commerce, CFCs, and Flybuys

Weckert said supermarkets e-commerce penetration rose to over 13% and that the business achieved double-digit growth across same-day, next-day, click-and-collect, and “immediacy” missions. She highlighted improvements in app engagement, with monthly active visitors up 32% and the app accounting for 54% of e-commerce revenue.

Management said same-day delivery commenced in Melbourne in the first quarter and Sydney in the second quarter, alongside a catchment extension to Geelong and the Surf Coast. Weckert also said Coles expanded its partnership with Uber Eats, offering up to 17,000 products through the platform, and extended its “windowless click and collect rapid” to 255 stores nationally. Executives said online NPS improved meaningfully, supported by better availability and fulfillment.

On CFCs, management did not provide specific growth rates but said CFC volumes increased and continued to outpace total supermarkets e-commerce sales growth. In response to questions about costs, Elias said CFC financial performance was in line with expectations and that prior one-off implementation costs had “fell away,” with no lingering costs. He added that the e-commerce business was a positive contributor to earnings.

Flybuys exceeded 10 million active members during the half, up 6.2%, Weckert said. She also noted strong growth in Coles Plus subscriptions, supported by benefits such as free deliveries, free rapid click and collect, and double Flybuys points.

Liquor: subdued market, banner simplification completed, focus on warehouses

In liquor, Elias said sales revenue declined 3.2% as the market remained subdued and competitive intensity increased, particularly at the big-box end. He said the company completed its “Simply Liquorland” store conversion program during the half. Weckert said the convenience portfolio—about 90% of the liquor store network—delivered positive sales growth, while the Liquorland Warehouse format (about 10% of the network) faced disproportionate pressure in the period. Liquor EBIT was affected by the softer top line and AUD 13 million in one-off conversion costs, according to Elias.

Weckert said early indications following the completion of the Liquorland conversions in mid-December were encouraging, citing a “very significant and material uplift” in customer satisfaction. However, she emphasized that the liquor market backdrop remained challenging due to what she described as both a structural, generational shift in consumption and cost-of-living pressures. She said improving the performance of Liquorland Warehouse stores would be a focus over the next six to 12 months. Management said liquor like-for-like sales were down 2.5% early in the second half, but did not provide market share commentary, citing limited quality of available liquor market data.

Cost savings, AI investment, and outlook

Weckert said SSI delivered AUD 133 million in cost savings in the half, bringing total benefits to around AUD 700 million since the start of FY2024 and keeping the company on track for more than AUD 1 billion over the four-year program. Elias later explained SSI benefits have historically been weighted about one-third to gross profit and two-thirds to cost of doing business (CODB), though he said the first half was more weighted to CODB (roughly a quarter to gross profit and three-quarters to CODB).

Weckert also detailed a broad set of AI applications across personalization, forecasting, replenishment, rostering, supply chain optimization, and loss prevention, and said Coles had rolled out tools such as ChatGPT Enterprise and Microsoft Copilot, alongside training with OpenAI.

On trading, Weckert said that in the first seven weeks of the third quarter, supermarket revenue increased 3.7%, or 5.3% excluding tobacco. She said market share data indicated the result represented above-market growth and that Coles had retained a portion of customers gained during last year’s industrial action disruptions in Victoria. Management said it expected comparisons to become “very clean” by the fourth quarter.

About Coles Group (ASX:COL)

Coles Group Limited operates as a retailer in Australia. It operates through Supermarkets and Liquor segments. The company operates various supermarkets, which offers fresh food, groceries, general merchandise, and liquor; and coles.com.au, which offers a choice of home delivery, including same-day, overnight drop and go services, and pick up from click and collect locations. Its Coles Financial Services provides insurance, credit cards, and personal loans to Australian families. The company is also involved in the retailing of liquor through its various stores under the Liquorland, First Choice Liquor Market, and Vintage Cellars brand names, as well as retail media services through its store network and online platforms.