By Sherin Sunny
Aug 25 (Reuters) - Australia's Coles Group reported a softer-than-expected start to fiscal year 2027 on Tuesday as rival Woolworths' collectibles campaign weighed on its Supermarkets division's sales growth, sending its shares to a 12-week low.
The country's second-largest grocer said Supermarkets sales growth in the first eight weeks of fiscal 2027 matched the 3.7% rise seen in the fourth quarter of fiscal 2026, but didn't disclose the current-period figure.
However, that fell short
of the Visible Alpha consensus estimate of 4.7% growth in the first six months, implying a weaker-than-expected start to the year.
That was mainly due to Woolworths' Disney OOSHIES collectibles program in late July and early August, which temporarily dented sales at Coles' Supermarkets division before momentum normalised after the promotion ended.
Woolworths will report its full-year earnings on Wednesday.
Coles shares fell as much as 2.3% to A$22.12 on Tuesday, their lowest since early June, before recovering to trade 0.2% lower as of 0100 GMT, while the broader S&P/ASX 200 index rose 0.4%.
Coles reported underlying net profit of A$1.26 billion ($900.77 million) for the year ended June 28, driven by 3.7% growth in Supermarkets sales revenue to A$41.47 billion, beating a Visible Alpha estimate of A$1.24 billion.
On a statutory basis, Coles' full-year net income grew 1% to A$1.09 billion, mainly impacted by a post-tax one-off charge of A$165 million related to the underpayment of its employees.
It declared a final dividend of 37 Australian cents per share, up from 32 cents a year earlier.
Coles forecast total capital expenditure of A$1.55 billion in the 2027 financial year, higher than A$1.41 billion in 2026, and said it will invest A$190 million to support a change programme, dual running, and redundancy costs.
"Given the softer-than-expected start to the year ahead and the higher capital expenditure guidance, we see the shares trading off today," said Tom Kierath, head of consumer research at Barrenjoey.
($1 = 1.3988 Australian dollars)
(Reporting by Sherin Sunny in Bengaluru; Editing by Vijay Kishore and Rashmi Aich)
