Coles delivered 2.2% group sales growth in the first quarter, powered by supermarkets and a sharp rise in online shopping. But slowing second-quarter momentum and higher fuel costs have prompted the company to expect first-half Supermarkets EBIT to be in line with the prior year.
- Group sales revenue rose 2.2% to $11.209 billion
- Supermarkets sales increased 3.6%, with comparable growth of 2.7%
- Supermarkets eCommerce sales jumped 22.9% to $1.623 billion
- Liquor revenue fell 1.3% as customer preferences shifted towards smaller packs and RTDs
- First-half Supermarkets EBIT expected to be in line with the prior corresponding period
Supermarket growth withstands promotional pressure
Coles Group Limited (ASX:COL) has kept sales moving higher, but the quarter came with a clear warning on profitability: first-half Supermarkets EBIT is now expected to be in line with the prior corresponding period as fuel costs rise and retailers compete harder for value-conscious shoppers.
Group sales revenue increased 2.2% to $11.209 billion in the 13 weeks to 27 September 2026. Supermarkets remained the engine, with revenue up 3.6% to $10.320 billion and comparable sales growth of 2.7%. That was slower than the 4.6% comparable growth recorded in the prior corresponding quarter, although Coles said its two-year Supermarkets growth rate was 10.7% excluding tobacco.
The result extends the supermarket sales trajectory reported in Coles FY26 sales growth, when full-year revenue rose 2.8% and digital sales provided a major source of growth. In the latest quarter, Coles said heightened promotional activity and customers shopping across multiple retailers and channels partly offset contributions from new and renewed stores.
Online sales accelerate while value investment deepens
Digital shopping was the standout operating metric. Supermarkets eCommerce sales rose 22.9% to $1.623 billion, lifting penetration to 15.7% from 13.3% a year earlier. Growth was led by customer fulfilment centres and immediacy channels, while Coles 360 income increased 5.1% as suppliers engaged with the expanding online proposition.
Coles is also leaning further into its own ranges and loyalty ecosystem. Exclusive to Coles sales grew 4.3%, ahead of total Supermarkets growth, with Coles Finest up 13.3% after more than 80 new own-brand products were launched. Flybuys swipe rates increased by 110 basis points, while the value of points redeemed at Coles rose 16%, according to the release.
Liquor remains the weak spot as Viva agreement nears expiry
Liquor revenue declined 1.3% to $831 million, broadly matching the comparable sales decline. Convenience formats remained in positive growth and warehouse trends improved, but online sales excluding liquor sold through coles.com.au fell 3.2% as the business cycled promotional activity tied to last year's website consolidation.
The Other segment recorded just $58 million of revenue as volumes under the Product Supply Agreement with Viva Energy Group Ltd declined ahead of its expected expiry in November 2026. The agreement's approaching end had already featured in Coles Q3 sales update, which reported the same expiry timetable.
Second-quarter moderation puts Christmas execution in focus
Coles said sales growth had moderated in the first four weeks of the second quarter, although Supermarkets sales remained resilient. The company has relaunched its Every Day Price program, increased investment in value and launched what it described as its largest-ever Exclusive to Coles Christmas range.
That investment comes as fuel prices have risen over the past two months amid geopolitical uncertainty. Coles expects additional fuel-related costs in the first half compared with the prior corresponding period, and now sees first-half Supermarkets EBIT broadly flat year on year, excluding significant items. The next test is whether Christmas volume and online growth can offset the cost of defending market share.
Bottom Line?
Coles is still growing sales, but the flat first-half EBIT expectation shifts attention from revenue resilience to the cost of maintaining value and momentum through Christmas.
Questions in the middle?
- Can Coles convert its strong eCommerce and own-brand growth into improved supermarket margins?
- Will the Every Day Price relaunch and Christmas range restore second-quarter sales momentum?
- How materially will higher fuel costs and promotional intensity affect the full-year earnings outcome?