Coles Group (ASX:COL): What Does Slower Supermarket Growth Mean for FY27?

Aditi Sarkar

05 November 2026 08:50 PM AEDT

Coles Group (ASX:COL): What Does Slower Supermarket Growth Mean for FY27?

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Highlights

Q1 FY27 group sales increased 2.2% to AUD 11.21 billion for the 13 weeks ended 27 September 2026.
Supermarkets sales rose 3.6%, while comparable sales growth moderated to 2.7%.
Supermarkets eCommerce sales increased 22.9% to AUD 1.62 billion.
Management expects first-half FY27 Supermarkets EBIT, excluding significant items, to be broadly in line with the prior period.

Coles Group Limited (ASX:COL) operates supermarkets and liquor retail businesses across Australia, selling groceries, fresh food and household essentials through physical stores and digital channels. Its 30 October 2026 trading update showed continued supermarket sales growth alongside a slower comparable-sales trend and higher cost pressures. Coles Group (ASX:COL) reported Q1 FY27 group sales of AUD 11,209 million, up 2.2% year on year, while management indicated that first-half Supermarkets Earnings would be broadly unchanged from the corresponding period.

First-Quarter Sales Show Uneven Momentum

For the 13 weeks from 29 June to 27 September 2026, Coles Group (ASX:COL) recorded Supermarkets sales of AUD 10,320 million, an increase of 3.6% year on year. Comparable supermarket sales rose 2.7%, compared with 4.6% in the prior corresponding period. The company identified heightened competition and promotional activity as factors influencing the trading environment. The difference between total and comparable growth also highlights the importance of changes in the store network and trading mix.

Exclusive to Coles products grew 4.3% during the quarter. Meanwhile, Liquor Revenue declined 1.3% to AUD 831 million, showing that trading conditions differed across the group. Other segment sales fell to AUD 58 million as an existing product Supply agreement approached its scheduled expiry. These movements mean group revenue growth should not be interpreted as uniform improvement across all divisions.

Online Sales Expand as FY26 Provides a Strong Base

Online supermarket sales were a notable contributor to the quarter. Coles Group (ASX:COL) reported eCommerce revenue of AUD 1,623 million, up 22.9% year on year. Online penetration increased to 15.7% of Supermarkets sales from 13.3%. The rising share of digital orders creates opportunities for customer convenience but also requires Investment in fulfilment capacity, delivery operations and technology. Revenue growth alone does not establish whether these channels have become more profitable.

For FY26, Coles reported group sales revenue of AUD 45,580 million, an increase of 2.8%. Earnings before interest and tax, excluding significant items, rose 9.9% to AUD 2,322 million, while net profit after tax on the same basis increased 13.7% to AUD 1,255 million. Supermarkets EBIT increased 12.2% and its Margin improved by 43 basis points. The board declared a final Dividend of 37 cents per share, taking fully franked FY26 dividends to 78 cents per share.

First-Half Guidance and Operating Pressures

Despite the FY26 margin improvement, Coles Group (ASX:COL) expects first-half FY27 Supermarkets EBIT, excluding significant items, to be in line with the prior corresponding period. Management cited higher fuel costs, while its quarterly commentary also referred to stronger promotional competition. This guidance concerns the first half rather than the entire financial year, and it remains subject to actual trading and cost outcomes.

The company continues to invest in value, online services and distribution capabilities. Those investments may support efficiency over time, but they also require expenditure before any operating benefit is established. In Liquor, the ongoing repositioning programme adds a separate execution challenge. For Coles Group (ASX:COL), changes in customer purchasing patterns, promotional intensity and logistics costs remain relevant to the FY27 earnings trajectory.

Key Insights

Coles Group (ASX:COL) enters FY27 with growing supermarket revenue and a larger online business, but comparable sales have slowed and near-term earnings guidance is cautious. The next half-year result will clarify how effectively the company manages competition, fuel costs and digital fulfilment expenses while maintaining customer demand. Liquor trading and progress on operational investments are additional areas to monitor.

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