How Are Coles’ New Automated Centres Transforming Its FY25 Growth and Sustainability?
Coles Group Limited reported modest growth in FY25 with $44.35 billion revenue and $1.08 billion net profit, underpinned by major supply chain investments and sustainability milestones. The company maintained dividends but faces ongoing legal challenges.
- FY25 revenue of $44.35 billion, EBIT of $2.08 billion
- Opened two automated Customer Fulfilment Centres and second Automated Distribution Centre
- Achieved 100% renewable electricity sourcing and significant emissions reductions
- Maintained fully franked dividend of 69 cents per share
- Ongoing legal proceedings with Fair Work Ombudsman and ACCC
Financial Performance and Growth
Coles Group Limited has released its FY25 results, reporting a revenue of $44.35 billion, representing a 1.8% increase from the prior year. Earnings before interest and tax (EBIT) rose modestly to $2.08 billion, while net profit after tax (NPAT) stood at $1.08 billion, reflecting a slight decline compared to FY24. The company maintained its fully franked dividend at 69 cents per share, underscoring a commitment to shareholder returns despite a challenging retail environment.
Strategic Supply Chain Investments
FY25 marked a pivotal year for Coles’ supply chain transformation. The company successfully commissioned two automated Customer Fulfilment Centres (CFCs) in Melbourne and Sydney, which now handle all next-day home deliveries in these metropolitan areas. These centres leverage cutting-edge automation technology to enhance product availability, freshness, and order accuracy, significantly improving the eCommerce customer experience.
Additionally, Coles completed the ramp-up of its second Automated Distribution Centre (ADC) in Kemps Creek, New South Wales, boosting supply chain efficiency and resilience. Construction commenced on a third ADC in Truganina, Victoria, as part of a $1.9 billion investment to automate the ambient supply chain along Australia’s eastern seaboard. These developments are expected to underpin Coles’ operational capabilities for decades.
Sustainability Milestones
Coles advanced its sustainability agenda by achieving 100% renewable electricity sourcing for its operations in FY25, a significant milestone in its climate strategy. The company reported a 71.4% reduction in combined Scope 1 and 2 greenhouse gas emissions from FY24 levels and set a Science Based Targets initiative (SBTi)-validated goal to reduce Scope 3 Forest, Land and Agriculture (FLAG) sector emissions by 30.3% by FY30.
Waste diversion efforts also progressed, with 88% of solid waste diverted from landfill. Coles continues to engage suppliers and farmers through initiatives like the Coles Nurture Fund, which has awarded over $40 million in grants to support sustainable agricultural practices.
Legal and Regulatory Challenges
Despite operational progress, Coles faces ongoing legal scrutiny. The Fair Work Ombudsman (FWO) is pursuing claims related to pay arrangements for salaried team members, with potential remediation payments estimated at $108 million. A related class action concerning supermarket managers remains unresolved.
Separately, the Australian Competition and Consumer Commission (ACCC) has initiated proceedings alleging misleading conduct in Coles’ Down Down pricing program, supported by a class action. Coles is actively defending these matters, though outcomes and financial impacts remain uncertain.
Leadership and Governance
In governance developments, Peter Allen succeeded James Graham as Chairman in May 2025, bringing extensive retail and financial expertise. The executive leadership team saw new appointments including a Chief Customer & Digital Officer and Chief Technology Officer, reflecting a focus on digital acceleration.
Executive remuneration outcomes for FY25 were aligned with performance, with short-term incentives awarded between 75% and 82% of maximum opportunity, reflecting solid financial results and strategic progress. Adjustments to remuneration structures are planned for FY26 to better align incentives with evolving strategic priorities.
Outlook
Looking ahead, Coles aims to leverage its enhanced supply chain infrastructure and digital platforms to sustain growth and improve customer experience. The company remains focused on delivering value amid cost-of-living pressures, advancing sustainability commitments, and navigating regulatory challenges. Investors will be watching closely how these factors influence Coles’ market position and financial trajectory in FY26 and beyond.
Bottom Line?
Coles’ FY25 results reflect steady progress and resilience, but legal uncertainties and execution of supply chain investments will shape its near-term outlook.
Questions in the middle?
- How will ongoing legal proceedings with the FWO and ACCC impact Coles’ financials and reputation?
- What operational efficiencies and cost savings will the new Automated Distribution Centres and Customer Fulfilment Centres deliver?
- How effectively can Coles sustain its sustainability momentum while balancing competitive pressures and inflationary challenges?