Coles Group (ASX:COL): Supermarket Growth and Margin Gains Put Cost-of-Living Strategy in Focus

Aditi Sarkar

31 August 2026 10:08 PM AEST

Coles Group (ASX:COL): Supermarket Growth and Margin Gains Put Cost-of-Living Strategy in Focus

Image Source: Shutterstock

You are reading a free article with opinions that may differ from the recommendation given by Kalkine in its paid research reports. Become a Kalkine member today to get access to our research reports, in-depth technical and fundamental research. Learn more

Start Your Free Trial Now!

Highlights

Coles Group (ASX:COL) reported higher FY2026 earnings, supported by supermarket sales growth and improved margins.
The company increased its Dividend following stronger profitability and cash generation.
Online growth and automation initiatives continued supporting operational efficiency.
Competition, regulatory scrutiny and consumer spending trends remain key challenges.

Coles Group (ASX:COL) has strengthened its position in Australia’s supermarket sector after delivering FY2026 results that highlighted sales growth, improved margins and increased Shareholder returns. The performance came during a period of elevated focus on grocery affordability, household budgets and competition among major retailers. With Woolworths Group also shaping the sector landscape, Coles’ ability to maintain customer value while improving efficiency remains central to its long-term strategy.

Latest Developments

Coles Group (ASX:COL) reported group sales Revenue of approximately $45.6 billion for the year ended 28 June 2026, increasing 2.8%. Net profit after tax excluding significant items rose 13.7% to $1.26 billion, while group Earnings before interest and tax increased 9.9%.

The board increased the full-year dividend by 13% to 78 cents per share, fully franked, including a final dividend of 37 cents per share.

The supermarkets division remained the key contributor, generating sales of $41.47 billion, up 3.7%, while segment EBIT increased 12.2% to $2.37 billion. Online performance was a major contributor, with eCommerce sales increasing 26.4% and automated customer fulfilment centres reaching EBITDA-positive status.

During the year, Coles opened 13 new supermarkets and 16 liquor stores, expanding its retail footprint.

What the Numbers Show

Coles Group (ASX:COL)’s earnings improvement was supported by efficiency initiatives, particularly through its “Simplify and Save to Invest” program. The initiative delivered $311 million in benefits during the year, helping fund customer value initiatives while supporting supermarket profitability.

Automation and supply-chain improvements have become important parts of Coles’ Margin strategy, allowing the company to improve productivity while managing operating costs.

However, performance across the group remained mixed. The liquor division continued to face challenges, with sales declining 3.3% to $3.55 billion and segment EBIT falling 47.8% to $59 million. The result highlighted the supermarket division’s importance in driving overall group earnings.

What Could Drive the Stock Next

Coles Group (ASX:COL)’s future performance will depend on its ability to maintain supermarket growth, improve efficiency and continue investing in customer value. Further benefits from automation programs and supply-chain upgrades could provide ongoing support for margins.

The company’s online channel remains another important growth area, with stronger digital adoption helping expand customer reach and improve fulfilment capabilities.

Further rollout of automated distribution capacity and continued productivity improvements could support earnings growth over the coming years. Maintaining Volume growth rather than relying primarily on price increases will also be an important indicator of underlying Business strength.

Key Risks to Watch

Coles Group (ASX:COL) continues to operate under significant regulatory and public scrutiny regarding supermarket pricing, supplier relationships and affordability concerns. These factors could limit pricing flexibility and influence strategic decisions.

Competition remains intense, particularly from Woolworths, discount retailers and independent operators targeting value-focused consumers.

The weaker performance of the liquor business remains a challenge, while rising costs across wages, energy and logistics could place pressure on margins. A slowdown in household spending could also affect consumer behaviour, even within the defensive grocery category.

Investor Takeaway

Coles Group (ASX:COL)’s FY2026 result demonstrated improving operational performance, supported by supermarket sales growth, margin expansion and increased shareholder returns. The company has shown that productivity initiatives and automation can support earnings growth in a competitive grocery environment. However, maintaining market share, managing regulatory attention and sustaining customer value will remain critical as the supermarket sector continues to evolve.

FAQs

Q: What was Coles Group’s FY2026 revenue?

A:Coles reported group sales revenue of approximately $45.6 billion.

Q: How much did Coles’ supermarket division sales increase?

A:Supermarket sales increased 3.7% to $41.47 billion.

Q: Did Coles increase its dividend?

A:Yes, Coles increased its full-year dividend by 13% to 78 cents per share.

Q: What helped Coles improve profitability?

A:Efficiency initiatives, automation and supermarket sales growth supported earnings improvement.

Q: What are the key risks for Coles?

A:Key risks include competition, regulatory scrutiny, cost inflation and weaker consumer spending.

Download Free Report – Explore 3 Stock Ideas & Industry Insights

Unlock 3 stock ideas and key industry insights in our free report. This information is general in nature and does not consider your personal objectives, financial situation, or needs. It is not financial advice.

All investments involve risk—consider independent advice before making any investment decisions.

View 3 Research Reports

Disclaimer:

This article (“Article”) has been prepared by Kalkine Pty Limited (ABN 34 154 808 312) (Australian financial services licence number 425376) (“Kalkine”) and its related bodies corporate who are authorised to provide general financial product advice. Kalkine.com.au and its associated pages are published by Kalkine.

Any information/advice provided in this article is general in nature and does not take into account your objectives, financial situation or needs. You should therefore consider whether the information is appropriate for your objectives, financial situation and needs before acting upon it.

There may be a Product Disclosure Statement, Information Memorandum or other offer document (“Offer Document”) for the securities or other financial products referred to in Kalkine articles. You should obtain a copy of the Offer Document and consider it before making any decision about whether to acquire the security or financial product.

Kalkine strongly recommends that you seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) before acting on any advice/information in this Article or on the Kalkine website. Not all investments are appropriate for all people.

The information in this Article and on Kalkine website has been prepared from a wide variety of sources, which Kalkine, to the best of its knowledge and belief, considers accurate. Kalkine has made every effort to ensure the reliability of the information contained in its articles (including this Article), newsletters and websites. All information represents our views at the date of publication and may change without notice.

The information in this Article does not constitute an offer to sell securities or other financial products or a solicitation of an offer to buy securities or other financial products.

Kalkine does not issue, sell or deal in any financial products.

This Article may contain information on past performance of particular investments. Please note past performance is neither an indicator nor a guarantee of future performance.

To the extent permitted by law, and excluding any dishonesty or gross negligence by Kalkine, Kalkine disclaims and excludes all liability for any direct, indirect, implied, punitive, special, incidental or other consequential loss or damage arising from the use of or reliance on this Article, the Kalkine website and any information published on the Kalkine website without any warranties or representations by Kalkine to you. To the extent the law prohibits or limits this exclusion, Kalkine limits its liability to the resupply of services.

Please also read our Terms & Conditions and Financial Services Guide for further information.

Employees and/or associates of Kalkine and its related entities may hold interests in the securities or other financial products covered in this Article or on the Kalkine website. Any such employees and associates are required to comply with certain safeguards, procedures and disclosures as required by law.

Some of the images/music that may be used in the Article are copyright to their respective owner(s). Kalkine does not claim ownership of any of the pictures displayed/music used in the Article unless stated otherwise. The images/music that may be used in the Article are taken from various sources on the internet, including paid subscriptions or are believed to be in public domain. We have used reasonable efforts to accredit the source wherever it was indicated or was found to be necessary.

Kalkine Media Pty Ltd, an affiliate of Kalkine Pty Ltd, may have received, or be entitled to receive, financial consideration in connection with providing information about certain entity(s) covered on its website.