The Coles Group Ltd (ASX: COL) share price is down 6% today after releasing its FY26 half-year result.
Coles is one of the largest supermarket businesses in Australia. It also has a liquor division which includes Liquorland.
Coles FY26 half-year result
Let’s take a look at some of the numbers of the report for the 27 weeks to 4 January 2026:
- Group revenue grew 2.5% to $23.6 billion
- EBITDA (EBITDA explained) increased 7.8% to $2.2 billion
- EBIT rose 10.2% to $1.23 billion
- Underlying net profit climbed 12.5% to $676 million
- Statutory net profit declined 11.3% to $511 million
- Interim dividend per share hiked by 10.8% to $0.41
Supermarket performance
There was a mixed performance across its different divisions.
First, the supermarket division. Supermarket revenue rose 3.6% to $21.4 billion and EBIT increased 14.6%.
It benefited from a 65 basis point (0.65%) increase in the gross profit margin to 27.8% It said it benefited from lower tobacco sales, annualised automated distribution centre (ADC) benefits, strategic initiatives and retail media income.
The supermarket e-commerce sales jumped 27%, reaching 13.1% of sales and retail media income rose 10.3%. Exclusive to Coles sales increased by 5.7%, with a strong performance by Christmas and seasonal lines.
During the half, Coles completed 35 store renewals, opened six new stores and closed one store, taking its total to 865 supermarkets.
Looking at the inflation of supermarket items, it increased from 1.4% in HY25 to 1.8% in HY26, with the second quarter seeing inflation of 1.9%. It’s on the rise.
Liquor
In the liquor division, revenue declined 3.2% to $1.9 billion and EBIT declined 37.3% to $42 million.
The liquor market remained “subdued” and competitive intensity “increased”, particularly in the second quarter, according to Coles.
Liquor’s gross profit margin improved by 17 basis points (0.17%) to 23.3%, but the cost of doing business (CODB) worsened by 135 basis points (1.35%) to 21.1%. This was because of inflation cost pressure and fixed cost deleverage (such as rent).
During the half, 11 new stores were opened, nine stores were closed and there were 127 store renewals. At the end of the half, it had 1,000 stores.
Other
The other segment includes corporate costs, its 50% share of Flybuys’ net result, the Coles property portfolio and the PSA with Viva Energy Group Ltd (ASX: VEA). The PSA is now due to end in November 2026 (extended from April 2026).
The ‘other’ revenue declined 21.9% to $314 million and the EBIT loss worsened by 66.7% to $45 million. The loss increase was largely due to an increase in actuarial-based insurance-related costs.
Significant items
Coles noted that its statutory net profit was impacted by $235 million of significant item costs relating to underpaid employees. The Federal Court judgement was handed down in September 2025 for the Fair Work Ombudsman’s (FWO) proceedings.
Outlook for the Coles share price
The supermarket business said that in the seven weeks of the third quarter, supermarket revenue was up 3.7% (or up 5.3% excluding tobacco) as it cycled impacts from Woolworths Group Ltd (ASX: WOW) industrial action last year.
It said that customers are “responding well” to its expanded range of everyday value products and loyalty offers.
Coles expects the market to remain “highly competitive” and it’s focused on providing customers with the right range, quality, value and innovation, while being more efficient and having streamlined operations.
In liquor, the sales decline has moderated to 2.5%. One-off costs of approximately $7 million are expected to be incurred in the second half as part of its simplification process.
I think Coles shareholders can be happy with the underlying net profit growth and dividend increase. However, it’s disappointing to see the Coles share price has dropped and that the statutory net profit declined.
I think it’s one of the ASX dividend shares to look at, with a dividend yield of around 5% including the useful franking credits.
