Coles cashes in as it steps up value campaigns, picks up sales from Woolies

Value-for-money promotions during the Christmas, Halloween and Black Friday seasons helped Coles lift earnings in the latest half as the supermarket chain benefited from the troubles of rival Woolworths, where a protracted worker strike left supermarket shelves bare.

Boosted by improvements in stock availability and investments in home-brand products, earnings before interest and tax (EBIT) rose 2.4 per cent to $1.1 billion in the six months to January 5. Net profit fell 3 per cent to $576 million, weighed down by one-off costs in relation to a new automatic distribution centre in Victoria, the grocery giant reported on Thursday.

The earnings beat market expectations, sending Coles’ share price up over 3 per cent to $20.34 on Thursday. They earlier hit $20.84, an all-time high.

Coles chief executive Leah Weckert said the company’s operational result was partially aided by a ramp-up in stock in Victoria and NSW during Woolworths workers’ industrial action.Credit: Eamon Gallagher

The supermarket chain also announced the retirement of its chairman James Graham at the end of April. Graham, who chaired the board since Coles’ shares started trading on the ASX in 2018, will be replaced by former Westfield chief financial officer and then-Scentre chief executive Peter Allen.

The stronger operational result was partially aided by a ramp-up in stock in Victorian and NSW stores during Woolworths workers’ industrial action late last year, which Coles estimates delivered it more than $100 million in extra sales as it dragged down its larger competitor’s profits.

Woolworths said on Wednesday its net profits slumped 20.6 per cent for the half-year period, driven down by lower grocery sales during the 17-day industrial action.

“We showed our ability to execute in the lead-up to Christmas, when we responded at pace to the supply chain disruption faced by our major competitors,” Coles CEO Leah Weckert told reporters.

During late November, the grocery chain added more stock to shelves and bolstered staff presence in some Victorian and NSW stores that were impacted by the industrial action at Woolworths, which led to $120 million in extra sales.

“We did see a lot of customers come and visit our stores who hadn’t shopped with us for a period of time, or in some cases ever, because they weren’t able to do a full shop at our competitor,” Weckert told this masthead.

Some customers have gone back to their usual Woolworths store while others have stayed with Coles, she added.

“Convenience is a significant driver of store choice. We’ve had other customers where … we have actually seen them stick with us as they’ve come into the new year, which is really pleasing.”

The nation’s second-largest supermarket also continued to invest in its home-brand range during the first half of the 2025 financial year by rolling out over 530 new products. Revenue from Coles-exclusive products lifted by 5.1 per cent, with customers especially taking to the more premium Coles Finest range during Christmas.

A cost-saving initiative also delivered $157 million in savings, helping to offset rising wages, while theft losses reduced marginally.

Both Coles and Woolworths plan to cut their product ranges in the name of simplification, with Weckert pointing to the example of 13 types of table salt on offer.

“We would describe it as range optimisation, where we’re actually looking to remove duplication where we have lots of products that are very similar,” she said.

“When we reduce complexity, that drives efficiency for us as a business, but it actually also makes it easier for the customer to shop.”

The grocery chain said it’s seeing food inflation – which was 7.2 per cent this time two years ago – easing further, now at 1 per cent excluding tobacco. Prices for apples, pears, stone fruits and red meat products are falling, while shipping costs and raw ingredient prices like cocoa are elevated.

Coles declared a 37¢ fully franked interim dividend to shareholders.

More and more Australians are turning online to do their grocery shopping, with Coles’ e-commerce sales rising 22.6 per cent in supermarket items and online liquor sales rising 9.2 per cent. However, liquor has been a poor-performing arm of Coles for some time, with bottle shop sales ticking up just 0.8 per cent and earnings diving 20.2 per cent.

Parting chairman James Graham has led the board since the supermarket demerged from Wesfarmers and listed on the Australian Securities Exchange in 2018, and has overseen major investments in technology and automation, the sale of Coles Express to Viva Energy and other key strategic decisions. Allen has been a non-executive director on the Coles board since September.

The Australian Competition and Consumer Commission is due to issue the final report of its inquiry into the supermarket sector to the federal government tomorrow. It will then be considered by the government and released to the public at its discretion.

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