Coles Jumps on Full-Year Results: What Investors Need to Know

Coles (ASX: COL): Stability Today, Efficiency Gains Tomorrow

Coles Group (ASX: COL) opened the day up nearly 4 percent at $21 after releasing its full year results, and the reaction tells us something important about how investors see this company.

In a market where volatility and uncertainty dominate the headlines, Coles is being treated as a reliable anchor, the kind of stock investors turn to when they want steady income and protection against downturns.

The results show a familiar story. Supermarkets are doing the heavy lifting, with sales growth underpinned by stronger volumes and a booming eCommerce channel. Liquor, on the other hand, continues to lag, weighed down by subdued demand and higher costs. For a company in a mature phase of its business cycle, stable revenue and improving supermarket margins are exactly what income-focused investors are looking for.

The bigger question is what comes next. Coles is investing heavily in automation, digital platforms, and efficiency gains, all of which could reshape how this defensive stalwart delivers growth in the years ahead. The FY26 outlook hints at a business quietly reaching an inflection point, and that is where the real story for investors begins.

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Coles Delivers Steady Growth Led by Supermarkets

Coles reported group sales revenue of 44 billion for the year, an increase of 1.8 percent, or 3.6 percent on a normalised basis. Supermarkets remained the clear growth driver, generating 40 billion in revenue, up 2.4 percent. Liquor contributed 3.7 billion, slightly lower than last year with a decline of 0.7 percent.

These results highlight the stability of Coles’ growth strategy, with supermarkets continuing to underpin performance while liquor reflects the more subdued parts of the business.

Coles Delivers Profit Growth Through Efficiency and Strong Cash Flow

What stands out for investors this year is how Coles is managing to offset stable or slower revenue growth through a sharp focus on operational efficiency and profitability. EBITDA rose 7.5 percent to 4.1 billion, while EBIT increased 2.2 percent to 2.2 billion. This improvement reflects management’s execution, with margin expansion in the supermarket division a key driver. Gross margins climbed to 27.5 percent, supported by supply chain and store efficiencies, alongside a better product mix that strengthened pricing power.

An increasingly important contributor to profitability was Coles 360, the retail media arm, which grew 13.5 percent and provides a high-margin revenue stream. For income-focused investors, this emphasis on profit generation is significant. Coles continues to demonstrate strong cash conversion, with working capital delivering a 73 million boost driven by higher payables, which means Coles can backlog its payments to suppliers, highlighting strong supply chain relationships.

 This reinforces confidence in the company’s ability to generate free cash flow, supporting both a competitive dividend yield and ongoing capital investment to strengthen the business.

What can investors expect for the future of Coles 

The outlook for Coles appears steadily optimistic as the company enters FY26. In the first eight weeks, supermarket sales rose 4.9 percent, or 7.0 percent excluding tobacco, highlighting the resilience of the core business despite new legislation weighing on tobacco sales. Liquor sales were flat, although management expects improvement as cost pressures ease and the store network is further streamlined.

Capital expenditure is forecast at around 1.2 billion, slightly lower than last year, with a continued focus on renewals, digital investment, and automation. FY26 also marks the first year in which Coles will capture the full annualised benefits from its automated distribution and customer fulfilment centres, with transition costs now behind it. 

Management has made clear that priorities remain centred on delivering value and quality for customers, unlocking the efficiency gains from automation, and maintaining tight cost discipline. Together, these initiatives provide a stable platform for earnings while positioning the business for steady, long-term growth.