Coles 1st Half Net Profit Falls 11% on Worker Remediation Costs

By David Winning

SYDNEY--Supermarket owner Coles said its half-year net profit fell by 11%, as the benefits of higher food sales were more than offset by a provision made to compensate workers who were underpaid some years ago.

Coles reported a net profit of 511 million Australian dollars (US$364.1 million) for the six months through December, down from A$576 million a year ago. Coles said it took an additional A$165 million post-tax provision to cover worker-remediation costs.

Revenue rose by 2.5% to A$23.69 billion, led by supermarket sales growth of 3.6% while liquor revenue was down by 3.2%.

On an underlying basis, which excludes significant items, Coles's half-year profit totaled A$676 million. That was up 13% on year, and was broadly in line with a consensus analyst forecast of A$674.4 million collated by Visible Alpha.

Directors of the company declared an interim dividend of 41 Australian cents a share, up from 37 cents a year ago.

Interest in Coles's result intensified after chief Australian rival Woolworths this week beat market expectations for its own earnings and outlook. Woolworths said trading since the start of January has been strong in Australian food, building on first-half sales growth of 3.6% in its biggest division. That prompted investment bank Jefferies to suggest the company has regained its sales leadership over Coles.

Coles also provided a trading update alongside its result on Friday. It said supermarket sales revenue rose by 3.7% in the first seven weeks of its fiscal third quarter, with growth higher at 5.3% when tobacco is excluded. Liquor sales fell by 2.5% in the same period.

Investors were alert to Coles choosing to step up promotional activity to beat back competition from Woolworths and watching for new signs that consumers are trading down to cheaper produce or shopping at discount food retailers to save money at a time when rising interest rates are rekindling cost-of-living concerns.

"Customers remain value oriented and are responding well to our expanded range of everyday value products and loyalty offers," Coles said in its outlook commentary. "We expect the market to remain highly competitive."

Write to David Winning at david.winning@wsj.com

(END) Dow Jones Newswires

February 26, 2026 17:04 ET (22:04 GMT)