Key Highlights

  • Coles reported first-quarter supermarket sales of $10.3 billion, up 3.6%.
  • Total group Revenue was $11.2 billion, while liquor sales fell 1.3%.
  • The company is relaunching its Every Day Price program across more than 4,000 products.
  • Higher fuel costs in the first half of FY27 and the Christmas trading period are the next points to watch.

Coles Group Limited (ASX:COL) remains a focus on the ASX 200 today after its first-quarter sales update showed supermarket sales growth of 3.6%, with the company responding through further price Investment and a relaunch of its Every Day Price program. The release answers the question of how Coles intends to respond to a tougher sales period: management plans to step up value measures ahead of Christmas. The update covered the 13 weeks to 27 September 2026 and was released on 30 October.

The Sales Update

Coles reported total group sales revenue of $11.2 billion for the quarter. Supermarket sales reached $10.3 billion, an increase of 3.6% on the same period a year earlier. Liquor sales declined 1.3% to $831 million, extending a theme of softer Demand in that category.

The sales figures attracted attention because they arrived two days after Woolworths reported Australian Food sales growth of 6.9% for its own first quarter. The comparison needs some care, because Woolworths' period ran for 14 weeks to 4 October and promotional calendars differ between the two companies. Even so, the gap between the two growth rates has become the central point of discussion for the supermarket sector this week.

The Every Day Price Relaunch

In response, chief executive Leah Weckert said the company would double down on value to attract cost-conscious shoppers. The company plans to take further action to lower shelf prices and will relaunch its Every Day Price program with more than 4,000 products. The program is expected to run for at least six months.

A price commitment of this scale represents a specific operating decision. Lower shelf prices can draw shoppers and improve perceptions of value, although they can also reduce the Margin earned on each item unless they are offset by Volume gains, supplier support or cost savings. How that balance plays out will become clearer at the half-year result, when the company reports Earnings as well as sales.

Cost Pressures

Coles also said that higher fuel costs were expected to add to its costs in the first half of FY27. Fuel affects grocers through distribution networks, inbound freight and supplier costs. It has been a significant issue in the national Inflation figures, with the Australian Bureau of Statistics reporting a 9.4% monthly increase in automotive fuel prices in September after a 14.8% rise in August.

The Reserve Bank has linked part of the inflation outlook revision to higher fuel and Commodity prices associated with the Middle East conflict. For a Business with a national logistics network, sustained fuel inflation can be a direct cost pressure at the same time as the company is seeking to lower prices on shelves. That combination makes the cost side of the business an important area to monitor.

Other Priorities Set Out by Management

Beyond the pricing plans, Coles identified convenience as a priority. This includes online growth and quick meal solutions, along with products in high-protein and healthy categories. Management also said it would sharpen its offer in the coming months ahead of what it expects will be a tougher Christmas period.

These initiatives are aimed at different types of shopping occasions. Online growth addresses consumers seeking delivery or click-and-collect services, while convenient meal Options target time-poor households. High-protein and health-related products reflect changing consumer preferences that support premium ranges even when households are looking to save elsewhere.

The Consumer Backdrop

Coles is operating in an environment of rising costs for households. Annual inflation reached 4.3% in September, while the cash rate is now 4.85%, the highest level in 18 years. Variable Mortgage rates at the major banks will rise by 0.25 percentage points from 13 November. Both the Reserve Bank and the banks have noted that the pressure on households is uneven.

Other retailers have also spoken about softer conditions. Wesfarmers, JB Hi-Fi and Super Retail Group each reported moderating or mixed sales on 29 October, while department store chain David Jones entered voluntary administration on 5 November. Supermarkets sell essential items and so are generally less exposed to this pressure, but the current week's disclosures show that the competitive fight for shoppers on a budget is intensifying.

What to Watch Next

Investors will be watching for any further pricing action and for signs of how shoppers respond to the Every Day Price relaunch. The company's Christmas trading performance is the next major test. The half-year result will then reveal the effect on gross margin and earnings, as well as the size of any cost increases from fuel. Commentary on liquor, where sales declined in the quarter, will also be examined, given that the division accounted for $831 million of first-quarter revenue.

The response from competitors is another factor. Woolworths has an investor day scheduled for 18 November and has already highlighted its own festive value range, so any changes in promotional intensity across the sector will be relevant to the Coles outlook. Regulatory attention on supermarket pricing has also been a feature of the sector and will remain part of the background as both companies promote their value credentials.

The supermarket result also shows the importance of the comparison period. Coles' 13 weeks ended a week earlier than Woolworths' 14-week period, so holiday timing and promotions can affect the two figures in different ways.

Fuel costs may also vary between regions.

Key Takeaways

Coles reported first-quarter supermarket sales of $10.3 billion, up 3.6%, and total group revenue of $11.2 billion. Liquor sales fell 1.3%. The company is responding with a relaunch of its Every Day Price program across more than 4,000 products and has flagged higher fuel costs in the first half of FY27. Christmas trading and the half-year margin outcome are the next points of evidence on how that plan is working.