Coles Group now expects first half Supermarkets EBIT, excluding significant items, to be in line with the prior corresponding period, after cost-of-living pressure and elevated competitor promotional activity continued into the first four weeks of the second quarter.
The retailer also flagged fuel. Fuel prices remained volatile and rose through the first quarter, with higher fuel-related cost price requests from suppliers toward period end. Coles said geopolitical uncertainty had pushed fuel prices up over the past two months and it expects to incur additional fuel-related costs in the first half compared with the prior period.
The guidance follows a strong FY26, when underlying EBIT rose 9.9 per cent to $2.32 billion.
Group sales revenue rose 2.2 per cent to $11.2 billion for the 13 weeks to 27 September. Supermarkets sales grew 3.6 per cent to $10.3 billion, with comparable sales growth slowing to 2.7 per cent from 4.6 per cent a year earlier.
Coles Group managing director and CEO, Leah Weckert, said eCommerce and own brand had performed well, but supermarket growth was flat on the prior quarter.
“We know household budgets are under pressure, sand customers are shopping more deliberately across retailers and channels. There is more to do to ensure we are front of mind for customers in this environment, and we are taking action to sharpen our offer over the coming months,” Weckert said.
Dairy and meat drive inflation
Supermarkets price inflation held at 1.1 per cent, broadly in line with 1.0 per cent in the fourth quarter of FY26. Coles said inflation was primarily driven by cost price increases in dairy and meat and moderating deflation in fresh produce, partly offset by deflation in non-food categories.
Fresh grew ahead of the rest of the store, led by meat and dairy. Coles also increased investment in its Coles Simply and everyday value ranges and in meat, and has since relaunched its Every Day Price program.
Own brand and retail media grow
Exclusive to Coles sales rose 4.3 per cent, ahead of overall Supermarkets growth, with more than 80 new own brand products launched in the quarter. Coles Finest was the strongest tier, up 13.3 per cent. Coles has launched its largest Exclusive to Coles Christmas range.
Supermarkets eCommerce sales rose 22.9 per cent to $1.6 billion, lifting penetration to 15.7 per cent, led by its customer fulfilment centres and immediacy channels. Coles 360 retail media income increased 5.1 per cent, which Coles attributed to growing supplier engagement with its online offer.
