Highlights

  • Macquarie Research issues Outperform rating on Coles Group with AUD 23.80 price target
  • Supermarket sales rise 4.0% to $9.78 billion, driven by strong Volume-led growth excluding tobacco
  • Liquor segment declines 3.9%, reflecting softer consumer sentiment and competitive pressures

Coles Group Limited (ASX:COL) is one of Australia’s largest supermarket and retail grocery operators, with a significant presence across food retail, liquor, and online grocery channels. The company operates a nationwide network of supermarkets supported by a growing eCommerce platform and integrated Supply chain infrastructure.

At the latest market close, Coles shares traded at $22.02, marking a decline of 3.93% for the session. The stock moved within a narrow intraday range of $22.00 to $22.24, reflecting active trading around key price levels. Coles currently holds a Market Capitalisation of approximately $30.78 billion, positioning it as one of the largest listed consumer staples companies on the ASX.

Recent market attention has been shaped by two separate developments: the release of Coles’ Q3 FY26 sales results and a research note from Macquarie Research, which issued an Outperform rating with a price target of AUD 23.80. These two factors are independent in nature, but together contribute to ongoing investor focus on the stock.

Share Performance and Market Activity

Coles Group shares experienced downward pressure in the latest Trading session, declining nearly 4% despite steady underlying operational performance. Trading volumes exceeded 3.35 million shares, indicating active participation from institutional and retail investors.

The price movement reflects broader market repositioning within the defensive retail sector rather than a single fundamental catalyst. Supermarket operators such as Coles often exhibit relatively stable Demand profiles, but short-term share price fluctuations can still occur due to changes in sentiment, sector rotation, or broader macroeconomic signals.

The bid-ask range of $22.00 to $22.24 suggests a tightly held trading band, consistent with large-cap consumer staples stocks that typically exhibit lower Volatility compared to discretionary retail peers.

Broker Coverage: Macquarie Issues Outperform Rating

Macquarie Research has initiated coverage on Coles Group with an Outperform rating and an AUD 23.80 target price. The valuation implies moderate upside relative to the current trading price and reflects a constructive outlook on the company’s Earnings stability and market positioning.

The broker’s assessment is based on Coles’ consistent execution in its core supermarket Business, supported by ongoing operational efficiencies, stable Demand trends, and disciplined pricing strategies. Macquarie’s view also reflects the structural resilience of grocery retail, where Demand tends to remain relatively inelastic even during periods of economic uncertainty.

Importantly, the broker rating is independent of Coles’ latest quarterly sales update and does not directly correlate with short-term share price movements. Instead, it represents a forward-looking view based on medium-term Earnings assumptions and sector positioning.

Supermarket Segment Performance

Coles’ Supermarkets division remained the primary driver of group performance in Q3 FY26, delivering sales Revenue of $9.78 billion, an increase of 4.0% year-on-year. Comparable sales rose 3.6%, reflecting sustained execution across pricing, availability, and promotional activity.

Excluding tobacco, sales growth strengthened further to 5.7%, highlighting strong Volume-led performance. This was supported by targeted value initiatives, promotional campaigns, and continued customer engagement across loyalty programs such as Flybuys and Coles Plus subscriptions.

eCommerce continued to be a key growth channel, with online sales increasing 24.8% and penetration rising to 13.6%. The growth reflects ongoing structural adoption of online grocery shopping, supported by expanded fulfilment capabilities and improved digital engagement.

Inflation within the supermarket segment moderated during the quarter, with pricing pressures easing across fresh produce and packaged goods. This contributed to a more balanced trading environment, although certain categories such as red meat continued to experience cost pressures.

Liquor Segment and Operational Pressure

In contrast to supermarkets, Coles’ Liquor division reported weaker performance, with sales declining 3.9% to $781 million. Comparable sales fell 4.3%, reflecting softer consumer sentiment and increased competitive intensity in the liquor retail market.

Performance was particularly impacted in Warehouse-format stores, while convenience-focused outlets remained relatively resilient. The company noted that broader consumer caution, particularly during March, contributed to subdued trading conditions.

Despite Revenue pressure, customer engagement metrics improved, supported by enhanced loyalty program participation and ongoing digital integration. eCommerce within the liquor segment also posted modest growth, supported by partnerships with third-party delivery platforms.

The divergence between supermarket strength and liquor weakness highlights differing Demand dynamics within Coles’ portfolio, with essential goods outperforming discretionary categories.

Operational Context and Strategic Focus

Coles continues to focus on value delivery, Supply chain efficiency, and customer experience across its retail network. During the quarter, the company completed multiple store renewals and opened new supermarket formats, reflecting ongoing Investment in physical retail infrastructure.

Management commentary highlighted continued focus on balancing pricing competitiveness with supplier cost pressures, particularly in areas such as freight, fuel, and packaging. These cost inputs remain important considerations in maintaining Margin stability across the Business.

The company’s integrated retail model, combining physical stores with digital channels, continues to underpin its strategic positioning in the Australian grocery market.

Market Outlook and Consumer Trends

Coles has indicated that supermarket sales momentum has remained broadly consistent into the fourth quarter, suggesting continued stability in core Demand. However, the company also noted increasing cost pressures across its operations, alongside rising supplier price requests.

Consumer behaviour trends continue to evolve, with a noticeable shift toward home cooking and value-seeking behaviour amid broader economic uncertainty. This dynamic has supported supermarket Demand while contributing to weakness in discretionary categories such as liquor.

The company remains focused on maintaining a competitive value proposition while managing input cost Inflation and Supply chain complexities.

Conclusion

Coles Group Limited continues to demonstrate operational resilience in its core supermarket Business, supported by consistent Volume growth, strong eCommerce expansion, and disciplined execution across its retail network. However, performance divergence across segments remains evident, with liquor trading conditions reflecting softer consumer sentiment.

Separately, Macquarie Research’s Outperform rating and AUD 23.80 target price introduces a positive external assessment of Coles’ medium-term Earnings profile and market positioning. While this broker view is independent of the company’s latest sales update, it reinforces ongoing institutional interest in the stock.

Overall, Coles remains positioned as a stable large-cap retail operator within the Australian market, with its performance closely tied to supermarket execution, consumer Demand trends, and operational efficiency across its integrated retail ecosystem.