Why Did Coles Shares Slide Despite Strong Earnings Growth?
Source: Kapitales Research
Highlights:
Supermarket strength drives earnings: EBIT (excluding significant items) rose 10.2% to $1.23 billion, with supermarket EBIT up 14.6% and eCommerce sales surging 27%.
Profit impacted by legal costs: Reported NPAT fell 11.3% to $511 million due to significant items linked to a Federal Court judgment.
Shares tumble despite dividend: Coles declared a fully franked 41 cps interim dividend, but the stock dropped 8.7% at the time of writing amid concerns over softer growth and weak liquor sales.
Coles Group Limited (ASX: COL) delivered solid first-half earnings growth, yet investors hit the sell button. So, what’s behind the sharp market reaction? At the time of writing, Coles shares were trading at $20.320, down 8.7%, following the release of its 2026 half-year results for the 27 weeks to 4 January 2026.
Strong Profit Growth, But Market Focus Shifts
Coles reported Group sales revenue of $23.6 billion, up 2.5% on the prior corresponding period. Group EBIT (excluding significant items) rose 10.2% to $1.23 billion, reflecting solid operating momentum.
Net profit after tax (excluding significant items) increased 12.5% to $676 million. However, after including significant items linked to a Federal Court judgment in relation to Fair Work Ombudsman proceedings, reported NPAT fell 11.3% to $511 million. The board approved a fully franked interim dividend of 41 cents per share, reflecting the company’s solid cash flow position and confidence in its financial strength.
Supermarkets Shine, Liquor Lags
The Supermarkets division remained the key growth engine. Sales rose 3.6% to $21.4 billion, while EBIT jumped 14.6%. Excluding tobacco and prior-period industrial action impacts, supermarket sales growth was even stronger. eCommerce sales surged 27%, with penetration lifting to 13.1%, supported by digital investments and automation in distribution centres.
However, the Liquor division struggled. Sales declined 3.2% to $1.9 billion, while EBIT fell sharply by 37.3% amid intense competition and softer demand.
Why Did the Market React Negatively?
Despite improved margins and operational efficiencies, investors appeared concerned about:
Softer headline supermarket sales growth compared to rivals
Weak liquor performance amid competitive pressure
The impact of significant legal items on reported profit
While Coles highlighted strong customer satisfaction, value campaigns and cost efficiencies, the market’s focus shifted to growth momentum versus competitor performance.
Disclaimer for Kapitales Research
The materials provided by Kapitales Research, including articles, news, data, reports, opinions, images, charts, and videos ("Content"), aare intended for personal, non-commercial use only. The primary goal of this Content is to educate and inform readers. This Content is not meant to offer financial advice, nor does it include any recommendation or opinion that should be relied upon for making financial decisions. Certain Content on this platform may be sponsored or unsponsored, but it does not serve as a solicitation or endorsement to buy, sell, or hold any securities, nor does it encourage any specific investment activities. Kapitales Research is not authorized to provide investment advice, and we strongly advise users to seek guidance from a qualified financial professional, such as a financial advisor or stockbroker, before making any investment choices. Kapitales Research disclaims all liability for any direct, indirect, incidental, or consequential damages arising from the use of the Content, which is provided without any warranties. The opinions expressed by contributors or guests are their own and do not necessarily reflect the views of Kapitales Research. Media such as images or music used on this platform are either owned by Kapitales Research, sourced through paid subscriptions, or believed to be in the public domain. We have made reasonable efforts to credit sources where appropriate. Kapitales Research does not claim ownership of any third-party media unless explicitly stated otherwise.
Customer Notice:
Nextgen Global Services Pty Ltd trading as Kapitales Research (ABN 89 652 632 561) is a Corporate Authorised Representative (CAR No. 1293674) of Enva Australia Pty Ltd (AFSL 424494). The information contained in this website is general information only. Any advice is general advice only. No consideration has been given or will be given to the individual investment objectives, financial situation or needs of any particular person. The decision to invest or trade and the method selected is a personal decision and involves an inherent level of risk, and you must undertake your own investigations and obtain your own advice regarding the suitability of this product for your circumstances. Please be aware that all trading activity is subject to both profit & loss and may not be suitable for you. The past performance of this product is not and should not be taken as an indication of future performance.
Kapitales Research, Level 13, Suite 1A, 465 Victoria Ave, Chatswood, NSW 2067, Australia | 1800 005 780 | info@kapitales.com.au
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Why Did Coles Shares Slide Despite Strong Earnings Growth?
Highlights:
Coles Group Limited (ASX: COL) delivered solid first-half earnings growth, yet investors hit the sell button. So, what’s behind the sharp market reaction? At the time of writing, Coles shares were trading at $20.320, down 8.7%, following the release of its 2026 half-year results for the 27 weeks to 4 January 2026.
Strong Profit Growth, But Market Focus Shifts
Coles reported Group sales revenue of $23.6 billion, up 2.5% on the prior corresponding period. Group EBIT (excluding significant items) rose 10.2% to $1.23 billion, reflecting solid operating momentum.
Net profit after tax (excluding significant items) increased 12.5% to $676 million. However, after including significant items linked to a Federal Court judgment in relation to Fair Work Ombudsman proceedings, reported NPAT fell 11.3% to $511 million. The board approved a fully franked interim dividend of 41 cents per share, reflecting the company’s solid cash flow position and confidence in its financial strength.
Supermarkets Shine, Liquor Lags
The Supermarkets division remained the key growth engine. Sales rose 3.6% to $21.4 billion, while EBIT jumped 14.6%. Excluding tobacco and prior-period industrial action impacts, supermarket sales growth was even stronger. eCommerce sales surged 27%, with penetration lifting to 13.1%, supported by digital investments and automation in distribution centres.
However, the Liquor division struggled. Sales declined 3.2% to $1.9 billion, while EBIT fell sharply by 37.3% amid intense competition and softer demand.
Why Did the Market React Negatively?
Despite improved margins and operational efficiencies, investors appeared concerned about:
While Coles highlighted strong customer satisfaction, value campaigns and cost efficiencies, the market’s focus shifted to growth momentum versus competitor performance.
Disclaimer for Kapitales Research
The materials provided by Kapitales Research, including articles, news, data, reports, opinions, images, charts, and videos ("Content"), aare intended for personal, non-commercial use only. The primary goal of this Content is to educate and inform readers. This Content is not meant to offer financial advice, nor does it include any recommendation or opinion that should be relied upon for making financial decisions. Certain Content on this platform may be sponsored or unsponsored, but it does not serve as a solicitation or endorsement to buy, sell, or hold any securities, nor does it encourage any specific investment activities. Kapitales Research is not authorized to provide investment advice, and we strongly advise users to seek guidance from a qualified financial professional, such as a financial advisor or stockbroker, before making any investment choices. Kapitales Research disclaims all liability for any direct, indirect, incidental, or consequential damages arising from the use of the Content, which is provided without any warranties. The opinions expressed by contributors or guests are their own and do not necessarily reflect the views of Kapitales Research. Media such as images or music used on this platform are either owned by Kapitales Research, sourced through paid subscriptions, or believed to be in the public domain. We have made reasonable efforts to credit sources where appropriate. Kapitales Research does not claim ownership of any third-party media unless explicitly stated otherwise.
Customer Notice:
Nextgen Global Services Pty Ltd trading as Kapitales Research (ABN 89 652 632 561) is a Corporate Authorised Representative (CAR No. 1293674) of Enva Australia Pty Ltd (AFSL 424494). The information contained in this website is general information only. Any advice is general advice only. No consideration has been given or will be given to the individual investment objectives, financial situation or needs of any particular person. The decision to invest or trade and the method selected is a personal decision and involves an inherent level of risk, and you must undertake your own investigations and obtain your own advice regarding the suitability of this product for your circumstances. Please be aware that all trading activity is subject to both profit & loss and may not be suitable for you. The past performance of this product is not and should not be taken as an indication of future performance.
Kapitales Research, Level 13, Suite 1A, 465 Victoria Ave, Chatswood, NSW 2067, Australia | 1800 005 780 | info@kapitales.com.au