Key Highlights

  • Sales Revenue rose 2.8% to A$45,580 million, excluding significant items.
  • EBIT rose 9.9% to A$2,322 million, and net profit after tax rose 13.7% to A$1,255 million.
  • Supermarkets eCommerce sales rose 26.4% to A$5.6 billion.
  • The total fully Franked Dividend was 78 cents per share, up 13.0%, including a 37 cent final dividend.

Why is Coles Group (ASX:COL) spending more on automation and store renewals just after posting a year of higher profit? On 25 August 2026 the supermarket operator reported FY26 results showing Earnings growth well ahead of sales growth, and management said it was "now investing in the next phase of growth". The answer is that the group appears to be using the strength of its Supermarkets division to fund efficiency projects, while a weaker Liquor Business is being restructured.

The FY26 result

Sales revenue: A$45,580 million, up 2.8 per cent.

EBIT: A$2,322 million, up 9.9 per cent.

Net profit after tax: A$1,255 million, up 13.7 per cent.

Total fully franked dividend: 78 cents per share, up 13.0 per cent, including a 37 cent final dividend.

Earnings growing roughly three to four times faster than sales is the central feature of the result. That gap typically reflects Margin improvement and cost control rather than Volume growth alone. It is worth noting that these are the company's "excluding significant items" figures, so they will differ from statutory results.

Supermarkets: the profit engine

Supermarkets is the dominant part of the group.

Supermarkets sales revenue up 3.7 per cent, with EBIT up 12.2 per cent. The EBIT margin rose by 43 basis points.

Supermarkets eCommerce sales up 26.4 per cent to A$5.6 billion.

Sales of "Exclusive to Coles" products, which include own-brand lines, up 6.1 per cent.

Own-brand products and online sales are both strategically important. Own-brand products generally carry higher margins than branded goods, and a growing online business can add cost if fulfilment is inefficient. Coles has said it is investing in automation to improve that picture, including Supply chain automation and a new automated distribution centre in Victoria, alongside an accelerated store opening and renewal program and a Coles Capability Centre.

Liquor: the weak spot

Management said Liquor is undergoing a multi-year strategic repositioning intended to integrate it more closely with Supermarkets, optimise the store network and simplify operations. Such programs can involve store closures or conversions and one-off costs, so the path back to growth may not be smooth.

Outlook for FY27

Management said sales growth was tracking at a similar rate to the final quarter of FY26 and that Supermarkets and digital had "positive momentum".

Competitive position

Coles operates in a concentrated Australian supermarket market, where its main competitor is Woolworths, alongside Aldi, Costco and independents such as those supplied by Metcash.

Strengths include scale, a large store network, a growing own-brand range and a developing online and data capability. Challenges include intense price competition, cost Inflation in wages and energy, and public and political sensitivity over grocery prices. Because Coles sells everyday essentials, its earnings tend to be more defensive than those of discretionary retailers, but that does not make them immune to margin pressure.

Key risks

Margin pressure: Profit growth in FY26 came largely from margin gains. If competitors cut prices more aggressively or cost inflation rises, those gains could erode.

Regulatory and political risk: Grocery pricing and supplier relationships remain a public focus.

Execution risk: Large automation and distribution projects can run over time or budget, and benefits may arrive later than expected.

Liquor repositioning: The multi-year restructure may carry costs and may not deliver the integration benefits management expects.

Consumer conditions: Subdued sentiment has already weighed on Liquor and could affect discretionary categories within Supermarkets.

What to watch next

The next scheduled update for most listed retailers is a trading update at the Annual General Meeting or a half-year result in early 2027. Items of interest include supermarket sales growth against the figure reported for the final quarter of FY26, progress on the Victorian automated distribution centre, evidence of Liquor stabilising, and the pace of eCommerce growth and its profitability.

Bottom line

Coles' FY26 result shows a mature, defensive retailer improving profitability faster than sales through mix, own-brand growth and cost control, while investing for efficiency. The weaker Liquor division and the large Investment program are the main areas to watch.