Coles Group shares (ASX: COL) surged to a new all-time high after the Australian supermarket giant reported robust financial results for fiscal year 2025 and a promising start to fiscal year 2026. Investors reacted positively to the company’s sales growth, particularly in its eCommerce segment.
The Coles share price reached the ATH of A$22.70 before closing at A$22.50, marking an impressive 8.54% gain on the day. This surge reflects strong investor confidence in Coles’ ability to maintain its growth trajectory.
Coles reported total sales revenue of A$44.35 billion for FY25, a 3.6% increase compared to FY24 on a normalised basis. Supermarket sales revenue experienced a strong 4.3% year-on-year increase, while liquor sales revenue grew by 1.1%. The eCommerce segment was a standout performer, with sales reaching A$4.5 billion, up 24.4%, and penetration increasing to 11.2%.
Reported earnings before interest, taxes, depreciation and amortisation (EBITDA) from continuing operations rose by 11.0% to A$3.94 billion, while underlying EBITDA increased by 10.7% to A$4.05 billion year-on-year. Reported net profit after tax (NPAT) increased by 2.4% to A$1.08 billion, and underlying NPAT rose by 3.1% to A$1.18 billion.
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The company also declared a fully franked final dividend of 32.0 cents per share, consistent with the previous year.
However, rising costs impacted overall earnings with net profit after tax attributable to shareholders falling to A$1.08 billion in fiscal 2025, down from A$1.12 billion a year prior. Coles also noted a 30% decline in tobacco sales during the year, attributed to stricter tobacco laws and increased illicit trade.
Looking ahead, Coles noted that supermarket sales revenue increased by 4.9% in the first eight weeks of FY26, compared to the same period last year, surpassing the forecast of 3.6%. FY26 capital expenditure is expected to be approximately A$1.2 billion.
Analysts have set an average one-year price target for Coles Group Limited at A$21.49, with forecasts ranging from A$15.50 to A$24.10. The company offers a dividend yield of approximately 3.62%.
Bull Case:
- Strong supermarket sales growth, particularly in eCommerce.
- Consistent dividend payout appeals to income-focused investors.
- Positive start to FY26 indicates sustained growth momentum.
Bear Case:
- Rising financing and lease costs impacting profit margins.
- Decline in tobacco sales creates a drag on revenue.
- Net profit after tax missed analyst expectations.
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