Highlights

• Group sales Revenue reached A$45.58 billion, while underlying EBIT increased to A$2.32 billion.

• Supermarket EBIT rose to A$2.37 billion as margins improved and online grocery sales continued to expand.

• Liquor remained the main weak point, with lower sales and a sharp decline in segment EBIT.

• FY27 Capital Expenditure is expected to rise as Coles advances automation, distribution and capability investments.

Coles Group Limited (ASX:COL) is an Australian retail group centred on supermarkets, liquor and related consumer businesses. Its FY26 result showed that the supermarket division remained the main Earnings engine, with profit growing faster than sales as margins improved. At the same time, online grocery expanded rapidly and the company continued to invest in automated fulfilment and distribution. The main counterweight was liquor, where sales and earnings declined and management continued to reshape the store network.

Supermarkets Drive FY26 Earnings

For the 52 weeks to 28 June 2026, Coles reported group sales revenue of A$45.58 billion and underlying EBIT of A$2.32 billion. Underlying net profit after tax was A$1.26 billion, while the total fully Franked Dividend was 78 cents per share. Supermarkets generated A$41.47 billion of sales and A$2.37 billion of EBIT. The segment EBIT Margin reached 5.7%, indicating that earnings growth came from operating efficiency as well as sales growth.

Online Grocery and Automation Remain Central

Supermarket eCommerce sales reached A$5.6 billion in FY26 and represented 13.6% of supermarket sales for the year. Penetration increased further in the fourth quarter and remained elevated in the opening weeks of FY27. Its customer fulfilment centres moved into positive EBITDA in their second year of operation. This is important because online grocery can be costly to fulfil, making Warehouse automation and picking efficiency central to whether digital sales contribute sustainably to earnings.

The Investment programme remains substantial. Gross operating capital expenditure was A$1.19 billion in FY26 and is expected to rise to about A$1.55 billion in FY27. Construction of the Victorian automated distribution centre has been completed, with automation fit-out under way. Coles also announced a capability centre initiative and expects implementation spending in FY27 before the targeted efficiency benefits are realised in later periods.

Liquor Remains the Main Operational Pressure Point

Liquor sales fell to A$3.55 billion and segment EBIT declined to A$59 million. Coles has been repositioning the network by opening selected co-located stores while closing others. FY27 will test whether the revised network can stabilise sales and improve profitability. The scale of the supermarket Business limits the group-level earnings impact, but liquor remains the clearest area where execution still needs to improve.

Balance Sheet and FY27 Priorities

Net Debt excluding leases was A$1.78 billion, while lease-adjusted Leverage was 2.3 times. Coles entered FY27 with supermarket sales momentum broadly consistent with the closing period of FY26. The key priorities are likely to be successful commissioning of the Victorian distribution centre, continued improvement in online fulfilment economics, delivery of the planned capability investments and progress in the liquor reset. The expiry of the current product Supply arrangement supporting the convenience business in November 2026 is another operational milestone to watch.

Key Insights

Coles enters FY27 with a supermarket business that is producing higher earnings from a relatively mature sales base, while digital penetration and automation are becoming more important to the operating model. The trade-off is higher capital spending and the need to execute several technology and network projects without disrupting service. Liquor remains the weaker part of the portfolio. The next phase will therefore depend less on headline sales growth and more on whether Coles can convert investment into durable productivity gains while stabilising underperforming areas.