Supermarket giant to reveal earnings amid pressures
Derek Rose |
Australia’s second-biggest supermarket chain is about to reveal how soaring petrol prices, three interest rate hikes and subdued consumer confidence have dented its sales.
Coles will announce its 2025/26 earnings for the 52 weeks to June 28 on Tuesday, a day before Woolworths does the same.
Coles had been gaining on its larger rival, which has been distracted by various issues, including a recent court case brought by the competition watchdog after it was accused of offering illusory discounts to shoppers.
But that came to an end in February, when Woolworths reported stronger sales growth than Coles.
The trend continued with the third-quarter results announced in May, with Coles reporting 3.6 per cent comparable sales growth versus Woolworths’ 5.3 per cent.
When it comes to earnings, Coles is expected to report an adjusted net profit of around $2.2 billion, on underlying earnings close to $4.2 billion, which would be better than the prior year, according to analysts.
Woolworths shares have also outperformed Coles, rising 18.9 per cent over the past 12 months compared to a 9.9 per cent rise for its rival.
In comparison, the stock exchange’s benchmark S&P/ASX200 index has gained just 1.5 per cent in the past 12 months.
“Investors have gone back to basics by buying up the supermarkets,” said eToro lead analyst Josh Gilbert.
“This week, we’ll find out how good a deal they got.”
Woolworths had a better story than Coles, which had a margin problem to manage, Mr Gilbert said.
“Suppliers are lining up for price increases, fuel, freight and packaging costs are all climbing, while liquor is still the drag it has been all year.”
Sales at Coles’ Liquorland business fell 3.2 per cent in the first half, compared to 3.6 per cent growth at its much larger supermarket business.
At the time, supermarket boss Leah Weckert said the liquor market remained subdued and competition had increased, “particularly at the big-box end of the market” – a likely reference to Dan Murphy’s bottle shops, owned by Endeavour Group.
AAP