Coles Earnings Preview: Supermarket Strength Meets a Stretched Share Price

Coles heads into FY26 results with supermarket volumes still firing and retail media quietly turning into a genuine profit lever. But shares are sitting near record highs after a two-year run, and February’s numbers showed just how little patience this market has for a headline miss.

Coles Group (ASX: COL) reports its FY26 results on Tuesday, 25 August, at an important point for the stock. Shares have climbed roughly 65% since late 2023, but the last set of numbers in February triggered one of the sharpest single-day sell-offs in Coles’ listed history, even though underlying earnings continued to grow. That disconnect between a solid underlying business and a punishing share-price reaction is the backdrop investors will be watching again.

Supermarkets Are Still Doing the Heavy Lifting

The core grocery business has maintained its momentum through the year. First-half group sales rose 2.5% to A$23.62 billion, with supermarkets up 3.6% to A$21.37 billion, or 6.1% excluding the prior-year competitor industrial action and tobacco effects.

Underlying EBIT climbed 10.2% to A$1.23 billion, while underlying NPAT rose 12.5% to A$676 million.

Reported NPAT told a different story: a A$269 million charge related to the Federal Court underpayment ruling dragged reported NPAT down 11.3% to A$511 million. That headline number was a key reason the market reacted negatively despite the stronger underlying result.

The third-quarter update in May offered a cleaner read. Group sales rose 3.1% to A$10.7 billion, while supermarket comparable sales increased 3.6%. E-commerce penetration reached 13.6%, with e-commerce sales up 24.8% as Coles continued to cycle the ramp-up of its Ocado-powered fulfilment centres.

Management said early fourth-quarter trading was tracking broadly in line with Q3 after adjusting for Easter and Anzac Day timing. The FY26 result will therefore show whether that underlying sales momentum held through to 30 June.

Source Coles Group

Liquor Keeps Going the Wrong Way

Liquor remains the weak spot in the portfolio. Sales fell 3.2% in the first half and the decline accelerated to 4.3% in Q3, reflecting cost-of-living pressure and longer-term changes in alcohol consumption.

While Liquor is not large enough to derail the group’s overall result on its own, another acceleration in the decline could weigh on second-half earnings and remain an important area of focus for investors.

Retail Media and Automation Are Starting to Show Up in the Numbers

The more interesting story sits underneath the headline sales figures.
Coles 360, the group’s retail media business, grew income 10.3% in the first half and contributed to a 65-basis-point improvement in gross margin to 27.8%, alongside benefits from Coles’ automated distribution centre network.

Coles has more than 9 million active Flybuys members, while a third automated distribution centre is under construction at Truganina in Victoria.

Retail media and automation are becoming increasingly important contributors to Coles’ margin expansion, making the group’s ability to sustain those gains an important swing factor in the FY26 result.

What the Market Expects

Current consensus is looking for FY26 sales revenue of around A$45.6 billion, underlying EBIT of approximately A$2.3 billion and underlying NPAT of about A$1.22 billion.

Consensus EPS is around 93 cents, while dividend expectations are approximately A$0.77–A$0.78 per share.

That would represent another year of underlying earnings growth and put the focus firmly on whether Coles can deliver against expectations while maintaining its margin momentum.

The Chart: A Rally Running Into Resistance

Coles shares have climbed from around A$14.82 in October 2023 to a record high of A$24.59 in June 2026, maintaining a clear sequence of higher highs and higher lows.

The stock has since pulled back from that record and is currently trading around A$22.84, leaving the key A$24.30–A$24.60 resistance zone in focus. The shares have tested this area three times without a decisive breakout.

A sustained break above A$24.30–A$24.60 would strengthen the bullish structure and bring A$26.50 into focus. On the downside, the A$22.00–A$22.18 support zone is the key level to watch if the earnings result disappoints or investors take profits.

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