‘Down, down’: Coles supermarket sales trail big rival

Kaaren Morrissey | October 30, 2026

Supermarket giant Coles is “not happy” with the performance of its bricks-and-mortar grocery stores after sales missed the mark, forcing it into a rare earnings downgrade.

The backtrack came as the nation’s second-biggest grocery and fresh-food seller signalled it had been buffeted by harder competition on prices from its rivals, including Woolworths and Aldi.

Cash-strapped shoppers are looking for bargains across a bigger range of retailers than before, and Coles needs to draw them back, chief executive Leah Weckert told a briefing on the retailer’s first-quarter performance on Friday.

“Online growth for us during the quarter was very strong … where we would say we’re not happy with momentum at the moment is in the bricks and mortar sales,” Ms Weckert said.

“We are continuing to see a really good level of customer count coming through the store, but we’re seeing a lot more splitting of baskets.”

Coles, which operates 870 supermarkets and 988 liquor outlets under brands like Liquorland and Vintage Cellars, reported a 2.2 per cent rise in group sales to $11.2 billion in the 13 weeks ended September 27.

Most of that was driven by the supermarkets, which generated a 3.6 per cent rise in revenue to $10.3 billion, excluding tobacco, compared to the prior corresponding period.

Both outcomes missed the market consensus and investors sent Coles shares down eight per cent to $21.55 after lunch, while Australia’s biggest grocery retailer Woolworths was up almost 1.5 per cent to $40.60.

“A disappointing update,” RBC Capital Markets analyst Michael Toner said.

Coles’ supermarket sales moderated going into October as consumers became even more sensitive to prices, forcing it to downgrade its outlook.

Supermarket interim earnings before interest and tax are now expected to be flat compared to the previous first half’s $1.2 billion, rather than an increase. This implies that group first half earnings could also be lower.

However, Ms Weckert said that while the first quarter sales momentum wasn’t where she wanted it to be, Coles was “taking action to sharpen our offer over the coming months” for consumers doing it tough in an economic environment of higher inflation, petrol prices and interest rates against a background of softer growth.

“We know customers are under pressure and we are confident that we have a strong plan in place to build their trust over this period,” she said.

Much of the plan involves strengthening its messaging, after relaunching its ”everyday value” program last week for thousands of products.

So far, Coles is amplifying products to customers in-store alongside a new ”lower everyday prices” program based on price cuts for at least six months.

Supermarket price inflation was lower at 1.1 per cent in the quarter, compared to 1.6 per cent in the previous corresponding quarter.

“Inflation was primarily driven by cost price increases in dairy and meat, and moderating deflation in fresh produce, partly offset by continued deflation in non-food categories,” Coles said.

Like its rival Woolworths, which reported first quarter sales on Wednesday, Coles said customers are very invested in grocery promotions.

The top tier retailer delivered a 4.7 per cent rise in sales to $19.4 billion for the 14 weeks ended October 4, on the back of a 6.9 per cent jump in supermarket sales to $14.7 billion. 

Elsewhere, sales in Coles’ bottle shops business fell 1.3 per cent to $831 million, with customers shifting to smaller pack sizes and ready-to-drink alcohol products. 

In 2025/26, Woolworths made an annual net profit of $1.1 billion, up 18 per cent on the prior year, which was in line with Coles’ flat result of $1.1 billion.