One of Australia’s largest supermarket chains, Coles Group, has released its latest March quarter financial results to the Australian Securities Exchange (ASX), alongside a major pledge to local consumers that the retail giant will absorb the bulk of looming supplier-driven price increases to keep grocery costs manageable for households.
For the three-month period ending March 31, Coles reported total supermarket sales hit $9.8 billion, representing a 4% year-on-year revenue increase that outpaced analyst market expectations. This growth came even as elevated fuel costs squeezed household disposable incomes and shifted consumer spending patterns across the country.
In the official ASX filing, Coles Chief Executive Leah Weckert noted that current cost pressures facing Coles’ network of suppliers mirror the intense strains seen during the height of the COVID-19 pandemic. Despite these challenges, she confirmed the grocery giant would take on much of the impending price hikes rather than passing the full burden to shoppers.
“We know value and product availability will be top priorities for our customers in the months ahead, and we are well positioned to respond to this challenge,” Weckert said. She pointed to Coles’ extensive range of affordable private-label brands, market-leading digital e-commerce infrastructure, and robust end-to-end supply chain capabilities as core strengths that let the company absorb extra costs without immediate price increases for consumers.
The latest quarter saw supermarket price inflation (excluding tobacco products) drop to 0.8%, down from 1.7% in the prior quarter. Coles attributes this cooling inflation to multiple factors: declining prices and strong supply of popular fresh produce, easing cost growth for packaged groceries, an increase in promotional sales events across stores, and targeted price reduction investments in high-demand categories including cleaning supplies and baby care products.
However, the company has flagged growing cost pressures stemming from the ongoing Iran conflict, which erupted in late February and has driven up global fuel, freight, and commodity input prices. In recent weeks, Coles has received a growing number of requests from suppliers for price increases, while the company’s own internal operational costs—particularly for fuel, freight, and packaging—have also trended upward.
“We are actively managing these cost pressures and will mitigate impacts where possible, while balancing the needs of both our customers and our supplier partners,” the company’s statement read. Already, the chain has partially absorbed sharp price increases for red meat, a trend that was also noted by competitor Woolworths when it released its own quarterly results a day earlier.
Beyond grocery, Coles reported that sales at its alcohol retail subsidiaries—including Liquorland, Vintage Cellars, and First Choice Liquor—have been hit by softening consumer sentiment that emerged in March. The company expects this downward trend will flow through to lower earnings for its alcohol division in the second half of the financial year, as reduced consumer spending cuts into sales volumes and fixed cost allocation across the business segment.