How Coles’ Digital and Sustainability Push Fueled FY25 Growth
Coles Group Limited reported solid FY25 results with strong supermarket growth, digital acceleration, and significant sustainability achievements. The company’s investments in automation and customer experience underpin its positive outlook for FY26.
- Normalised sales revenue growth of 3.6% and underlying EBITDA growth of 10.7%
- Supermarkets segment delivers volume-led sales growth and margin expansion
- Liquor segment faces subdued market but shows improved operating leverage in 2H25
- Full ramp-up of Automated Distribution Centres (ADCs) and Customer Fulfilment Centres (CFCs)
- 71.4% reduction in Scope 1 and 2 emissions from FY24 baseline
Strong Financial Performance Amid Market Challenges
Coles Group Limited unveiled its FY25 full year results, highlighting a steady financial performance driven by its core supermarket business. The company reported a normalised sales revenue growth of 3.6% and an underlying EBITDA increase of 10.7%, reflecting effective cost management and operational efficiencies. The supermarkets segment was the standout performer, delivering volume-led sales growth of 4.3% (normalised) alongside an expansion in underlying EBIT margin by 21 basis points.
Despite a subdued market environment, the liquor division showed signs of resilience with improved operating leverage in the second half of FY25. While sales revenue in liquor declined slightly, the segment benefited from new store openings and operational simplifications under the 'Simply Liquorland' banner, which is expected to complete by Q3 FY26.
Digital and Automation Investments Paying Dividends
Coles’ strategic investments in digital transformation and supply chain automation are bearing fruit. The company’s Automated Distribution Centres (ADCs) in Kemps Creek (NSW) and Redbank (QLD) are now fully operational, with construction underway on a new Victorian ADC in Truganina. These facilities have enhanced supply chain resilience and improved product availability, particularly during periods of market disruption and severe weather events.
eCommerce sales surged by 24.4% (normalised) in supermarkets, supported by enhancements to the Coles app and website, expanded delivery catchments, and increased subscription memberships. Customer satisfaction metrics, including online Net Promoter Scores, showed significant uplift, underscoring the success of these digital initiatives.
Sustainability and Community Commitments
Coles made notable progress on its sustainability agenda, achieving a 71.4% reduction in combined Scope 1 and 2 emissions compared to FY24, and an 81.3% reduction from its FY20 baseline. The company sourced 100% renewable energy and set ambitious targets for Scope 3 emissions reductions in the forestry and agriculture sectors.
Beyond environmental efforts, Coles maintained its position as Australia’s top corporate giver for the fifth consecutive year, donating 39.1 million equivalent meals to food relief organisations. The company also raised $8.4 million for FightMND in FY25, bringing total funds raised for motor neurone disease research to over $48 million since 2017.
Outlook and Strategic Focus for FY26
Looking ahead, Coles plans to open approximately 12 new supermarkets and 19 new liquor stores while closing a smaller number of underperforming outlets. Capital expenditure is forecast at around $1.2 billion, focusing on store renewals, digital platforms, and the Victorian ADC project.
CEO Leah Weckert emphasised the company’s commitment to delivering value, quality, and availability for customers, alongside disciplined cost control. The Simplify and Save to Invest program, which delivered $327 million in benefits in FY25, will continue to be a key driver of efficiency gains. With no further implementation or transition costs expected from ADC and CFC programs in FY26, Coles anticipates improved earnings contributions from these investments.
Bottom Line?
Coles’ FY25 results underscore a resilient retail strategy balancing growth, digital innovation, and sustainability, setting the stage for a pivotal FY26.
Questions in the middle?
- How will Coles navigate ongoing challenges in the liquor market amid subdued consumer demand?
- What impact will the new tobacco legislation have on supermarket sales and margins going forward?
- Can Coles fully realise the anticipated earnings benefits from its ADC and CFC investments in FY26?