‘Pressure off’: Coles to focus on checkout prices as court fine hits profits

Coles chief executive Leah Weckert has vowed the supermarket is “focused on taking pressure off at the checkout” as the company wrapped up a fortnight-long court battle against the competition watchdog over allegedly illusory discounts and specials.

Australia’s second-largest grocery giant grew supermarket sales by 3.6 per cent, excluding tobacco, during the first half of the 2026 financial year as people stuck to their budgets.

“Customers are shopping across different retailers, looking for promotions and specials and trading into more affordable options. And with this in mind, we remain focused on taking pressure off at the checkout,” Weckert told reporters on Friday.

The supermarket’s “Down Down” and “Everyday Value” discounts were subject to intense scrutiny last week in the Federal Court by the ACCC’s top legal counsels, which sought to prove Coles’ discounts between 2022 and 2023 were misleading by arguing it raised prices on a sample of everyday items ahead of its promotions so it could then claim to have put the products on special.

Coles’ overall group sales rose 2.5 per cent to $23.6 billion for the half-year period. Net profits declined 11.3 per cent to $511 million after the retailer set aside $165 million to cover penalties incurred for an underpayment scandal that found both Coles and Woolworths had failed to keep accurate records of staff rosters. Excluding the one-off penalty, Coles’ net profits actually rose 12.5 per cent to $676 million. The company will pay a fully franked interim dividend of 41¢ per share.

Investors sent Coles’ share price down sharply by 8.4 per cent in morning trade after softer sales growth (2.4 per cent) in the second quarter, and softer-than-expected trading in the first weeks of the third quarter, undershot the market’s expectations.

The result keeps it ahead of arch rival Woolworths, although it is starting to regain sales momentum after investing heavily into lowering prices.

“With a recent reversal of market-share trends, notwithstanding industrial action impacts in the previous corresponding period, focus will likely be on Coles’ capacity to regain share through building on execution and potential price investment,” said RBC Capital Markets analyst Michael Toner.

Specials and discounts drive significant sales volumes for supermarkets. Despite improvements in consumer sentiment in the lead-up to Christmas, Australians are expected to keep their belts tight amid expectations of further interest rate hikes to come.

Cost-of-living issues continue to challenge households, Weckert said.

“The interest rate rise we saw earlier this month has knocked that confidence a little bit,” she said. “At the moment, we haven’t seen any noticeable differences in behaviour in terms of that translating through. But it’s only [been] a couple of weeks post the rate rise, so it’s something to keep a close eye on as we move forward.”

Coles’ liquor sales fell 3.2 per cent as consumers reined in discretionary spending. That was a “very pleasing” result, Weckert said, given the backdrop of a “very challenging market”.

“People are spending less on liquor because it tends to behave in a slightly more discretionary way than food does.

“The market continues to be subdued as we see a … shift in terms of lower levels of consumption of alcohol, and that’s a generational trend that we have been seeing for a very long time,” Weckert said.

Elsewhere among retailers, Harvey Norman also recorded strong half-year revenue growth of 6.9 per cent to $5.16 billion. Profits after tax rose 15.2 per cent for the first half of the 2026 financial year.

The white goods and home appliances retailer also lifted overseas company-operated store profits by 35.6 per cent. It will pay a fully franked interim dividend of 14.5¢ per share.

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