Coles Group Ltd
(ASX: COL)Share Price and News

Overview of Coles Group

Coles Group (ASX:COL) is a major Australian retailer operating the Coles supermarkets (the second-largest supermarket chain in Australia), the liquor outlets under the Coles liquor banner (including FirstChoice, Liquorland and Vintage Cellars) and the flybuys rewards scheme. It also runs Coles Financial services that provides insurance, credit cards and personal loans.

Today, Coles operates a wide retail network including supermarkets, liquor stores and online grocery services, serving millions of Australian customers each week. The company’s core supermarket division remains its largest business segment, generating tens of billions of dollars in annual sales and making Coles one of the most significant retail companies in the country.

Coles' Company History

Founded in 1914, named after the surname of its founder, Coles began as a single variety store in the Melbourne suburb of Collingwood. For the first few decades it was essentially an early 1900s version of 'The Reject Shop' offering discounted items. It famously boasted 'Nothing over 1/-' (1 shilling).

Over the decades, the company grew organically and through acquisitions, including liquor retailers and fuel convenience stores, to build a diversified retail portfolio. In the late 1940s it got into cosmetics and foodstuffs as married women entered the workforce.

During the 1960s, by which time it was run by Edgar Barton Coles (one of 7 of George Coles' sons) it opened freestanding supermarkets - the first of which was in the Melbourne suburb of Balwyn. The plan was it would be a one-stop shop for families to get everything on a weekly shopping list. And so it is to this day.

The 1980s saw the introduction of electronic scanners and printed receipts as well as many of its forays including into liquor. 1985 was a key year as it merged with Myer and listed on the ASX. Flybuys was introduced in 1993 and it launched the first service station in 2004.

In 2007, Coles was acquired by Wesfarmers, for $19.3bn in what was then the highest takeover in Australian history. It has since been surpassed multiple times, most recently by AirTrunk in 2024. Although under Wesfarmers' ownership it underwent significant restructuring and modernisation, Wesfarmers wanted a return on investment and also believed the company now warranted its own board.

And so in late 2018, Coles demerged from Wesfarmers and was relisted as an independent company on the ASX, refocusing on its core supermarket and liquor operations. Coles relisted at $12.49 per share and has gained over 70% since then - albeit flatlining except in the last 12 months.

The pandemic didn't result in stores being closed but did result in supply chain disruptions. It emerged from those difficult times and has had a better couple of years than Woolworths as cost-conscious consumers opted for Coles.

Future Outlook of Coles Group Ltd (ASX: COL)

Coles' future is closely tied to consumer spending trends, food inflation and competition in Australia’s grocery market. As one of the country’s largest supermarket operators, Coles benefits from consistent demand for essential goods such as food and household products.

In recent years the company has focused on improving operational efficiency and digital capabilities. A key initiative is the “Simplify and Save to Invest” program, which aims to reduce costs through automation, supply chain improvements and technology upgrades. The program has already delivered hundreds of millions of dollars in efficiency benefits and targets around A$1 billion in total savings over four years.

Coles has also been expanding its online grocery business as consumer shopping habits evolve. E-commerce sales have grown rapidly, increasing more than 24% in recent periods, with digital channels now representing a growing share of supermarket revenue.

The company’s financial results show steady growth in its core supermarket division. In FY25, Coles generated approximately A$44.35 billion in total sales, while supermarket sales increased 4.3% year-over-year.

Looking ahead to FY26, the company expects continued investment in store renewals, supply chain infrastructure and technology. Capital expenditure is projected to be around A$1.2bn, supporting new supermarkets, automation projects and improved logistics capabilities.

Early indicators for FY26 have been encouraging, with supermarket sales in the first weeks of the financial year rising roughly 4.9% compared with the previous year. However, Coles still faces challenges including rising operating costs, regulatory scrutiny and intense competition from retailers such as Woolworths Group and discount chains like Aldi.

Is COL a Good Stock to Buy?

Coles Group is often considered a defensive consumer stock on the ASX because supermarkets sell essential goods that households purchase regardless of economic conditions. This makes revenue relatively stable compared with more cyclical industries.

One of Coles’ main strengths is its position in Australia’s grocery duopoly alongside Woolworths (ASX:WOW). Together, the two companies dominate a large portion of the national supermarket market, giving them strong purchasing power with suppliers and large customer bases.

The company also generates reliable cash flow from its supermarket operations, which allows it to pay consistent dividends to shareholders. Coles has historically provided a dividend yield that appeals to income-focused investors seeking relatively predictable returns.

Another positive factor is the company’s growing digital and automation strategy. Investments in e-commerce platforms, automated distribution centres and data-driven supply chains could help improve efficiency and profit margins over time. In addition, Coles continues expanding its private-label product range, including premium brands such as “Coles Finest,” which can provide higher margins than national brands.

However, investors should also consider several risks. Competition in Australia’s grocery sector is intense, with retailers frequently lowering prices to attract customers during cost-of-living pressures. Rising wages, logistics costs and supply chain disruptions can also impact margins.

Overall, Coles may appeal to investors seeking stable earnings, reliable dividends and exposure to Australia’s consumer staples sector. While the company may not deliver the rapid growth seen in technology companies, its essential retail business model can provide resilience and steady long-term returns for many portfolios.