Australia’s Coles beats annual profit estimate on strong sales, shares rise By Reuters

By Roushni Nair

(Reuters) – Australian grocer Coles reported a better-than-expected annual profit on Tuesday, driven by robust supermarket sales and improved inventory control to reduce theft-related losses, sending its shares to a two-year high.

The country’s second-largest grocer strengthened its competitive position through private label offerings and e-commerce sales, while moderating inflation fostered a more stable pricing environment and helped attract price-sensitive customers.

Shares in the Australian supermarket operator were up 2.4 percent as of 0035 GMT after rising as much as 3.2 percent earlier in the day to $19,050, their highest level since August 2022. The benchmark advanced up to 0.3%.

The grocer reported a 2.1 percent rise in net profit after tax from continuing operations to $1.13 billion ($765.01 million) for the year ended June 30, beating the Visible Alpha consensus estimate of $1.08 billion.

E&P Capital retail analyst Phillip Kimber said the figures were boosted by an extra week of trading, which generated bigger-than-typical gains for the grocer.

“However, with the softer start to FY25 and higher transformation costs – our initial thoughts are for minor 1-2% cuts to VA consensus estimates in FY25,” Kimber wrote in a client note.

Coles also noted a moderating trend in dairy inflation and fewer supplier price increases, allowing for more stable prices for customers despite rising commodity costs for cheese and eggs.

Supermarket sales revenue rose 4.3% to $39.04 billion.

Coles posted a 3.7% rise in supermarket sales in the first eight weeks of the 2025 financial year, driven by a consumer shift to home dining.

The grocer, however, reported a 9.4% rise in capital expenditure for FY24 to $1.42bn, mainly due to increased investment in store refurbishment, including stock loss technology.

In fiscal 2025, capital spending is expected to be $1.2 billion, with more store openings planned for its supermarkets and liquor segments.

The Melbourne retailer declared a final dividend of 32 Australian cents per share, up from 30 cents a year earlier.

($1 = 1.4771 Australian dollars)