Coles falls on weak start to 2027 as Woolworths' collectibles campaign dents sales

By Sherin Sunny

Aug 25 (Reuters) - Australia's ‌Coles Group ​reported a ​softer-than-expected start to fiscal year 2027 on Tuesday as rival Woolworths' collectibles campaign weighed on its Supermarkets division's sales growth, sending its ‌shares to a 12-week low.

The country's second-largest grocer said Supermarkets sales ⁠growth in the first eight weeks of fiscal 2027 matched the 3.7% rise seen in ‌the fourth quarter of fiscal 2026, ‌but didn't disclose the current-period figure.

However, that fell short of the Visible Alpha consensus estimate of 4.7% growth in the first six months, implying a ​weaker-than-expected start to the year.

That was mainly due to Woolworths' Disney OOSHIES collectibles program in late July and early August, which temporarily dented sales ⁠at Coles' Supermarkets division before momentum normalised after the promotion ended.

Woolworths will report its full-year earnings on Wednesday.

Coles ​shares fell as much as 2.3% to A$22.12 on Tuesday, their lowest since early June, before recovering to trade 0.2% lower ​as of 0100 GMT, while the broader ‌S&P/ASX 200 index rose 0.4%.

Coles reported underlying net profit of A$1.26 billion ($900.77 million) for the year ended June 28, driven by ⁠3.7% growth in Supermarkets sales revenue to A$41.47 billion, beating a Visible Alpha estimate of A$1.24 billion.

On a statutory basis, Coles' full-year net income grew 1% to A$1.09 billion, ⁠mainly impacted by a post-tax one-off charge of A$165 million related to the underpayment of ​its employees.

It declared a final dividend of 37 Australian cents per share, up from 32 cents a year earlier.

Coles forecast total capital expenditure of A$1.55 billion in the 2027 financial year, ‌higher than A$1.41 billion in 2026, and said it will invest A$190 million to support a change programme, dual running, ‌and redundancy costs.

"Given the softer-than-expected start to the year ahead and the higher capital ⁠expenditure guidance, we see the ‌shares trading off today," said ​Tom Kierath, head of consumer research at Barrenjoey.

($1 = 1.3988 Australian dollars)

(Reporting by Sherin Sunny in Bengaluru; Editing by Vijay Kishore and ‌Rashmi Aich)

---

Serious News for Serious Traders! Try StreetInsider.com Premium Free!

---

You May Also Be Interested In

• Broadcom credit risk measures rise amid AI financing deals
• Buffalo airport blames circuit fault, not shortage, for 3 flight delays
• Nebius Group closes $5.75B convertible notes offering