Coles reports mixed half-year results as sales rise but profits dip
Coles Group has reported mixed financial results for the first half of 2024, with sales growth but a drop in net profit. The retailer's shares fell 7.3% to A$20.56 after the announcement, despite a 2.5% rise in group sales to A$23.618 billion. Legal challenges and regulatory scrutiny continue to weigh on the company's performance.
In the six months ending December 2024, Coles saw group sales increase by 2.5% to A$23.618 billion. Supermarket revenue grew 3.7% in the first seven weeks of the third quarter, excluding tobacco, while liquor sales declined by a slower 2.5%. Online sales also climbed, reaching 13.1% penetration.
Underlying net profit after tax (NPAT) rose 12.5% to A$676 million, excluding one-off charges. However, reported NPAT dropped 11.3% to A$511 million due to A$235 million in charges tied to a Federal Court judgment. The company declared an interim dividend of 41 cents per share, fully franked, with an ex-dividend date of March 10.
Coles is expanding digital partnerships, including Uber Eats, and rolling out ChatGPT Enterprise to improve store operations. Yet, investors remain cautious about profit margins amid intense competition and pricing pressure. Meanwhile, rival Woolworths Group struggled with weaker sales growth of 5.5% (like-for-like 1.5%) and a stock decline of 5-7%, while Coles shares rose ~10% earlier in the year on stronger supermarket growth of 7.2% (like-for-like 4.1%).
The retailer's half-year results highlight both growth in sales and ongoing financial pressures. With legal battles and margin concerns persisting, Coles faces challenges in maintaining profitability. The company's next steps will likely focus on cost efficiencies and digital expansion to strengthen its market position.
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