Thank you, and good morning, everyone. Welcome to Coles' third quarter sales results for the 2026 financial year.

Before I begin, I would like to acknowledge the Traditional Custodians of this land on which we meet today, the Wurundjeri peoples of the Kulin Nation, and we acknowledge their strength and resilience, and pay our respects to their elders, past and present. I am joined in the room today by Charlie Elias, our CFO; Matt Swindells, our Chief Operations and Supply Chain Officer; Anna Croft, our Chief Commercial and Sustainability Officer; Michael Courtney, our Chief Customer Experience Officer; and Claire Lorber, our Chief Executive of Liquor.

Before I open up to Q&A, I would like to make a few comments on the results. I am pleased to report another strong set of results in the third quarter, reflecting both the resilience of our business and the consistency of our execution.

In Supermarkets, we delivered volume-led sales revenue growth of 4% and 5.7% excluding tobacco. This is above market sales growth and a particularly encouraging outcome in the current environment.

Our eCommerce channel continues to be a standout performer, with sales growing by 24.8%. Overall, Supermarkets inflation, excluding tobacco, moderated to 0.8% from 1.7% in Q2, reflecting deflation in fresh produce, easing inflation in packaged groceries, and increased promotional activity and price investment across a number of non-food categories.

This was partially offset by inflation in red meat. However, the full impact of the increased beef and lamb livestock costs of goods was partially absorbed as part of our investment in value for customers.

Our focus remains firmly on delivering value and availability. Value has always been a critical part of our offer, and customers are increasingly deliberate in how they shop.

We are responding by ensuring they can access quality products at competitive prices, whether in store or online, every time they shop with us. At the same time, we have maintained strong availability, despite ongoing supply chain volatility.

Encouragingly, all of these efforts are reflected in our customer metrics, with improved customer satisfaction scores across both Supermarkets and Liquor, including price satisfaction, reinforcing that our strategy is resonating with customers. In Liquor, sales revenue declined by 3.9%.

Sales in our core convenience portfolio remained resilient, despite the market environment, which continues to be challenging and subdued. Across the group, we have remained focused on our strategic priorities: delivering value, improving the customer experience, investing in our digital capabilities, and strengthening our supply chain, while also navigating short-term volatility in market conditions.

Looking ahead, Supermarkets sales revenue growth has remained broadly in line with the third quarter, while the Liquor market remains impacted by weaker consumer sentiment, and this is expected to have a flow-on impact to Liquor earnings in the second half. With heightened geopolitical tensions impacting fuel and other commodity import prices, our focus remains on continuing to provide customers with a compelling value proposition that supports their everyday needs, coupled with inspiration, as more of our customers are telling us they are shifting from eating out to cooking at home.

In recent weeks, we have seen an increase in supplier cost price increase requests and higher costs within our own operations, particularly in fuel, freight, and packaging. We are actively managing these and will mitigate impacts where possible, while balancing the needs of customers and suppliers.

As a business, maintaining and building long-term customer trust has never been more important to us, particularly in light of the current economic environment that our customers are facing, and the highly competitive landscape that we operate in. This will continue to be a clear focus over the coming months.

Thank you, and I'll now hand back to the operator for Q&A.

Good morning, everyone. You've called out an increase in price requests from suppliers, and I don't think that should surprise anyone.

In the past, Coles, as well as the broader industry, has done a very good job of recovering that higher cost while working very hard to continue to provide value for consumers. Is there anything different in this cycle that you're seeing so far that might limit your ability to continue to manage that dynamic and deliver good financial outcomes?

I might ask Anna to help with the answer here. I think broadly, our view, though, would be we've got a pretty established process here.

As we went through the last inflationary spike, value was very important to customers. We prioritized that, and we were able to walk the balance.

This time, it shouldn't be any different. Anna, maybe you can just talk to a little bit of what we're seeing.

Of course. Hi, Michael.

You're right. We are seeing a step-up in CPIs from suppliers.

The vast majority to date have been in the fresh areas. In the categories such as meat, dairy, and produce, and the way the pricing mechanics work, we're seeing those coming through and hitting us sooner, which you'd have probably seen some of that in store.

In terms of what we're seeing in packaged, we are seeing that step-up, and we're actually going through them very robustly and making sure that we manage the balance of how we keep our suppliers in the right space, but also how we balance value for customers. The vast majority of the requests to date have been fuel-related, and where we haven't got rise-and-fall as it relates to fuel in our contracts, that's how we're managing it.

As quickly as the fuel price comes out, that cost comes out as well. It is going to be a careful balance, and we do expect some level of inflation to come through.

We will be balancing it very carefully to make sure we look after customers, but we deliver what we need to as well.

Thank you.

Good morning, Leah and team. Just following off from that one, just interested in how you're thinking around managing that balance between profitability and the price requests in terms of just continue to lead on that.

You've had that sort of mid-low trial in South Australia. Just how are you sort of thinking around sort of promotional intensity?

Are you looking to change promotional depth? Are you going to lean more into sort of EDLP?

How do you balance that, just in terms of the psychology? Looking at a lot of Woolworths comments yesterday with respect to obviously the downgrade they had, talking to needing to increase investment and hold back on pushing price increases through.

Okay. Sorry, it's a great question, Ben, and it is certainly a balance.

We have a lot of mechanisms that we can use to deliver value to customers, as you've highlighted. Certainly, the work that we've been doing for some time to optimize our promotional program, that will continue going forward.

That's been working really well for us. As part of that, we have moved more lines into an EDLP position, particularly in non-food.

I think the other thing from a value perspective, and you will have seen the strength of the number in the results that we saw today, is own brand. Own brand is a real strength for us as a business.

It was something that customers really took advantage of as we went through some pressures around cost of living a couple of years ago. The growth in that has probably moderated over the last 12 months, but we've seen in this quarter that that strength has really come back.

That is an area where we have a lot of control about how we price, how we present it in store, how we market it. You've probably seen us doing a bit more of that over the last three months.

In terms of walking the balance, though, I guess, Charlie, do you maybe want to just talk through how we're thinking about some of the margin pieces?

Absolutely. Thanks, Ben, for the question.

Look, I guess if I look at it firstly from sort of at a high level, yeah, when we saw obviously these events sort of play out a little bit through the Middle East, our first focus really was to ensure we had the availability, right? The focus was very much on ensuring for our customers, availability was strong.

We actually took some investments in inventory into our supply chain, which really helped with very much our availability around inventory. That meant really working strongly with our relationships with our suppliers.

Our team members really leaned in there. Also, pleasingly, what you're seeing is actually the value of the investments that we've been making in the supply chain really pay off.

Delivering customer value is at the forefront. All this through is how do we continue delivering customer value, and that is really an important part of our decision-making.

In relation to costs, look, as Ben, we've had a really strong cost-out program now for a number of years, whether it was Smarter Selling, SSI, etc. It's in our DNA.

Our first approach here was when we saw the upward pressure of costs starting to sort of come through, the team sort of rallied around in terms of how do we play a role here in helping to mitigate these elements of costs and control them. If I look at some of the more immediate impacts, more closer to Q3, Q4, we did see, as in our release, some elevated sales in March from pantry stocking.

It peaked in sort of mid-March, but we saw those volumes normalized post that. This was across our network and that came through disproportionately in our regional stores.

In terms of supply cost increase requests, I think Anna addressed that a little earlier. We did see some of those, but we also saw supply costs in our own cost base and areas like fuel and freight, specifically.

They really had a minimal impact for us in Q3, but there is an impact in Q4 because the direct fuel mechanisms, there is a lag effect to those. In terms of Q4, we do expect, from a fuel perspective, probably an impact around $10 to $15 million as a result of the sort of price fright.

What we have seen pleasingly since April is actually those fuel prices moderate from the peak of that $3. Look, overall, I'd say we continue to invest in the customer offer.

That's at the forefront. We expect to see continued volume growth and the sort of mix shifts that we spoke a little bit earlier.

In terms of the impact on earnings, partly due to the timing lags and our cost recovery, but also how we're managing through this, at this stage, we don't expect a material impact in Q4. Really, our focus is very much balancing the needs of all our stakeholders: our customers, our suppliers, and our shareholders.

That's fantastic. Extremely helpful.

Thanks, team.

Good morning, Leah. Can I just ask a question about the, I guess I call it the broader consumer behavior?

It looks like both Coles and Woolworths have had a good quarter relative to the supermarket sector. Does that mean you're seeing less cross-shopping from consumers?

Do you see this better performance from Coles and Woolies relative to market persisting?

Thanks for the question, Craig. Obviously, we're lapping over a period of time, Q2 and Q3 were very disrupted last year because of the industrial action in our competitor's supply chain.

Going over the top of that, I think what we're seeing is a bit of a normalization of market shares. We had set ourselves a target that we wanted to grow ahead of market in this Q3 period because that would indicate that we had managed to hold on to some of the customers that we gained last year.

We're really pleased. We have been able to do that, and we certainly are seeing in the market share data that we get that there have been some unwinds from a market share perspective from some of the discounters and independents as we've lapped over that period from last year.

In terms of where the consumer is going, I think it's fair to say that sentiment has really shifted in the last two months. If you look at the Westpac-Melbourne Institute index, that fell in April to the lowest level that we've seen it at for over two years, which shouldn't be surprising.

We've had two interest rate increases, and we've seen this sharp rise in fuel prices because of the Middle East conflict. Again, we look at this as an opportunity.

It's an opportunity to engage with customers. To your question around are they consolidating shops, it's been interesting.

We saw obviously this increase, this pantry stocking through March and the early part of April, where people were putting a couple of extra items in the basket. We've also, from our cost of living survey, had customers say that since the Middle East conflict started, about 32% of customers are visiting supermarkets and shopping centers less times a week because they want to consolidate their shops to save on fuel.

For us, when we look at that, what really is critical within that is then how do we be the destination where they come to do that big shop? The behaviors around researching prices, willingness to shop at a broader range of retailers, buying more affordable products, we are very focused on leaning in on those and making sure we're very competitive on price week to week when they do research those prices, that we've got a great own brand portfolio, and the investment that we've made into that on the last couple of years, I think is really going to pay dividends for us as we move forward.

Then we need to make sure that we continue to have a great specials program and great loyalty program that underpins that as well. I think we've got a customer right now who is going to be eating out less, eating more at home, willing to invest some time to research price, and we think we're well set up to be able to lean into those trends.

Great. Thanks, Leah.

Good morning, Leah. Maybe just a question regarding Liquor.

If you just discuss where the reduced fixed cost fractionalization comment you've made hurt the most. Is it big box where your sales were weak or small format where your costs are more fixed, and maybe more generally around big box?

What's the outlook for that network given it seems to have been weak for some time? Thanks.

Yeah. Liquor has been a tough market.

I think we saw a very strong competitive push as we came into Christmas. That has continued as we've gone into the new calendar year, maybe moderated slightly in terms of that behavior.

The most significant thing we saw in the quarter was a step-down in customer sentiment when the Middle East conflict began. It really started end of March.

We saw quite a different result for January, February to what we have seen for March and April. All of the conversations we're having with suppliers is indicating that that's a market-wide impact that we're seeing, and certainly conversations I'm having with peers overseas that they're also seeing that there.

I think this is not something that is contained to Coles. In terms of what we're doing to address it, because we're definitely not sitting on our hands on this one, we are taking action.

As you say, it is a relatively fixed cost base, and that's primarily driven by the team member costs that we have because the vast majority of our stores only have one team member rostered on most of the time. There's limits to how much we can manage back our team remuneration costs at a cost line as the sales shift.

What we are doing is really looking at how we can streamline our other operations. We've been taking action on above-store costs.

You would have seen us during the quarter do a lot more integration with the food business, particularly in our co-located sites, and putting out campaigns that actually bring together food and liquor, and we're quite pleased with the success that we've been seeing on that. I think the other thing that we're leaning in on is how do we evolve the range?

This is quite an interesting one. I shared on the media call earlier that it's interesting where we're seeing some of the strengths of performance.

Mid-tier beer is performing quite well. Zero sugar RTDs growing really rapidly.

It's those things that have a health overlay to them. I think all of our research is pointing to the fact that actually consumers are engaging in more occasions where they consume beverages.

It's just a different type of beverage going forward. We need to be able to lean into that.

Actually, our convenience network, which is largely co-located, provides us a really interesting opportunity to do that going forward. We are actively assessing the role of the warehouses, and I think we would say there's a bit more work to do on that, but we'll come back with a bit of an update on that when we get to the full year.

I think, in summary, convenience is strong. We're integrating it more with food, and we see this as an opportunity to lean into some of the customer changes that we're seeing and probably a bit more of an update to come on the warehouse side as we come into full year.

Can you maybe quantify the decline in the big box? Would they be down sort of, gosh, 30%?

If you're talking 30%, 40%? I'm just curious around how you've spoken about the small format or the convenience stores sort of being broadly flat or the like there, but if we think about the math, maybe 10% of stores, 20% of sales, it looks quite a significant sort of decline there.

Maybe could you sort of provide the detail around how much that is down, please?

It's around 20%, Shaun.

Sorry, it's declining by 20% or it's the 20% of sales?

The 90 warehouses that we have, the decline is around 20% in the sales basis. As you can see, that is getting heavily offset by the fact that our sales in our convenience network, the other 910 stores, is broadly flat.

Fantastic. Thank you, Leah.

No worries.

Good morning, Leah and Charlie. Thanks for the commentary on the fuel.

That's very helpful. It has been encouraging, obviously, to see petrol pump price has come down recently.

Brent oil is still very volatile and still very elevated compared to the first half of this year. As you look into '27, where you may see an annual impact, are you looking at potentially bringing forward efficiency initiatives or cutting discretionary spending further, or other actions to mitigate these impacts, please?

Yeah. Thanks, Adrian.

Appreciate that. Adrian, obviously, lots of moving parts.

Things are moving very, very quickly. I'm not going to clearly give a bit of a view on FY27.

I think what you need to take away from this is, yeah, use the words we're not sitting on our hands. We have a really well-established cost program and productivity program at Coles, which has been around now for 8 years, right?

We've been targeting almost $2 billion over those 8 years in terms of offsetting cost structures. That's going to be clearly a continued focus of ours in terms of working through, especially on the direct costs that impact Coles, but really all costs, whether it's in the GP line or in CODB.

To give a view of FY27, we'll certainly give a much better view at the full year results, but it's far too early to be giving any views on FY27.

Thanks, Charlie.

Morning, Leah and Charlie and team. Just on the evolving sort of price competition outlook that you're seeing in the stores, how that competitive environment has evolved.

It'd be great if we could get a feel for percentage sold on promotion, if that's stepping up at all in this current environment where value is becoming more important. Are you seeing high-low promotions perform better, given all the focus on red tickets from ACCC, etc., and then just how you've seen sort of some of these early price rises go in terms that come through from suppliers, milk and bread and so on, in terms of the response?

I'm just trying to get a feel for sort of the outlook around that price and competition side, please.

Bryan, I might take that one. Look, I think what I would say is we continue to be really customer-focused, and we will absolutely be competitive.

We're taking it as a broad competitive set because every category in every market is different, we're taking a view there. I think our strategy on value has been consistent now for some time, which is to build customer trust on pricing, and focus on promotions where they really matter most to customers and make sure they're meaningful, while at the same time, really expanding our EDLP portfolio to give much more trusted value.

Actually, what we're seeing is promotional activity in Q3 and participation was actually slightly lower than Q2 and lower than last year, and that's offset by an increase in EDLP penetration and really on our targeted promotions as well. The other bit we are seeing is actually a really strong response from customers to having this balanced approach.

Actually, if I look at our Tell Coles satisfaction in the quarter, our metric was up year on year. If we look at the net affordability score, we were also up in terms of year-on-year performance there.

We continue to be laser-focused on making sure we're ultra-competitive, but we're balancing the right promotions, the right value set, with the right tiering in every category that we have.

Okay. Fantastic.

Thanks, Anna. Thanks, all.

Hi, guys. Just wanted to circle back on Liquor.

You mentioned your convenience business, which was flat, which is a great outcome in a tough market. You also called out March coming down.

Was that across the board, or was that really seen in the big-box business? I'm just trying to understand whether that's a market share shift issue or it's a whole market coming down issue.

March for us, definitely, from all the data we've seen and the triangulations that we've done with suppliers, is that it's definitely a whole-of-market piece. I would say the convenience portfolio generally is very resilient.

Okay. It was more a bigger impact in March in your big-box stores than in your convenience stores, is what

you're saying? That's right, Phil.

The convenience stores really benefit from the fact that we have transactions coming from the co-located supermarkets in the vast majority of cases, and that is really providing real resilience, and particularly while customers, as we talked about earlier, starting to think about how do they reduce fuel usage and consolidate shops. This is a classic one where customers would look to do these purchases together, so that convenience part of the network is really resilient.

Right. Thank you.

thanks. Morning, guys.

Just a quick one. Charlie, you mentioned that $10 to $15 mil of direct fuel impact in the fourth quarter.

Are you adopting incremental kind of cost-out strategies to offset that? Or should we think about that as an investment in I guess value?

How should we kind of think about how you guys are responding to that $10 to $15 mil impact?

Look, that's an estimate, Tom, pretty much of what the direct fuel impacts for us at the moment are for Q4. I think as I keep saying, I think our first focus is always going to be how do we offset those costs and look at go back to our program in terms of what are the ways to mitigate those.

We're calling out, it just gives you a bit of a view of the magnitude of that fuel price changes and the impact of the lag effects. As we will balance the needs of all our stakeholders as we look at our entire P&L, top to bottom.

Our first focus is how do we reduce those costs.

Great. Thanks, Charlie.

Once again, if you wish to ask a question, please press star one on your telephone and wait for your name to be announced.

Morning, Leah and team. Appreciate we've had some discussion around fuel and cost implications, but just keen to explore if we could a little bit deeper into e-com specifically.

Appreciate that channel's still growing at 25%. Your subscriptions are also growing at pretty elevated levels as well.

Just, yeah, how you're sort of thinking about mechanisms and pass-through in e-com more specifically, and how the CFCs are sort of playing a role in any potential efficiencies that are coming through that channel, just given that strong growth, please?

Thanks for the question. I might ask Michael whether he could talk to this one.

Thanks, Leah. Caleb, if I heard your question correctly, the line was breaking up a little bit, but it was more about specifically the cost impacts on e-com coming through in relation to fuel and what are we doing about it.

Is that right?

Yes, thank you.

Thank you. I think what we're benefiting from at the moment is very strong growth in sales, which is really important because that growth is driven from increased traffic, which drives sales, which drives improved economics for us, which is a positive.

I think in relation to the costs specifically for this business, it does relate to fuel. Now, we haven't made any decisions at the moment to move any of our fees in relation to our offer.

That being said, our fees are reviewed periodically, and certainly this is one factor that we need to consider. Anytime we are considering changes to the offer, we're always starting with making sure that we've got a competitive customer offer in the market.

I would describe it very similarly to the sentiments that you've heard from both Leah and Charlie, which is that there's a delicate balance that we need to walk between protecting the customer offer as well as delivering commercial outcomes for our stakeholders and shareholders. That whilst we're monitoring those cost impacts, there's still areas of our business where we're continuing to invest in the customer offer to make sure that we're driving a better experience and continuing to see growth.

That's great. Thanks, Michael.

Appreciate the color.

Morning, Leah and team. Just a follow-up on the Liquor business.

Can you sort of just, I guess, clarify or better understand the outlook comment that you've made there? Does that mean sales into April are sort of in line with what you've seen in March, which on my numbers looks like stepped down to about -6%?

Just hoping you can clarify what you've seen in April so far in Liquor.

Sorry, Peter. The line was really breaking up.

Was your question were the sales that we saw in April sort of more or less in line with March? Is that the question?

Yes.

Yes, that would be a fair assumption.

Yes,

we've seen that step-down in the customer sentiment flow through into the sales results for Liquor, and that has continued through into April.

Great. Thank you.

Oh, hi, team. Thanks for taking my question.

I was curious how you're going with your market share, particularly in non-food categories, because in February, you sort of called it out as a big focus, and that you were seeing some sort of positive emerging trends, presumably kind of more supplier price increases will be coming through in this category soon, and I'm just wondering if that kind of presents a risk to derailing some of the good progress you've already made in that category.

Thanks for the question, Michael. I might take the opportunity to talk about overall market share, and then I'll pass to Anna to talk about the health and home piece in particular.

I think one of the things we were really pleased about in this quarter, Q3, is that we were cycling a really strong result last year, and we were really cycling on top of that a strong result from two years ago. When you start to look at the three-year stack, what we are really delivering is consistency of sales growth ahead of market and building on that year on year.

We knew that coming into Q3 it was quite challenging to cycle the market share growth from last year given the environment we were operating in and the level of disruption. We're really pleased this year that we have been able to deliver that again, and obviously as we go into Q4, we're continuing that focus on the overall market share growth, noting Q4 again for us last year was a very very strong quarter.

I think we've been quite pleased with some green shoots in health and home, and Anna, maybe you can give us a bit of detail on that?

Yeah. Hi, Michael.

I think, no surprise, non-food has been a clear area of focus for us for some time, and we are seeing some really encouraging green shoots coming through. Progress has really been driven by sharper value.

We've been really focused on improving our range execution and a real move to EDLP in the space where it matters most for customers. As I've said before, this isn't a one-size-fits-all approach.

We're working category by category to define the range and the value proposition in the competitive environment that each of those operate in. We're really partnering closely with suppliers to make sure we're doing that in conjunction with them.

The bit for us as the most convenient destination for non-food products, our priority is to give customers no reason to shop anywhere else, and that remains our priority. What we have seen in the second half is actually a clear improvement in our market share trajectory.

We've gone from kind of below the market to in line, and actually more recently, we've seen our growth ahead of both the supermarket channel and the total market, which we're encouraged by. I think there's so many great examples of where we've reset categories such as paper or toilet tissue, where it's been really focused on bulk strategy, how we think about our CFC offer, how our own brand plays into that, and how our pricing hierarchy.

We're really pleased with that. We're very focused on innovation, and we're starting to see that really resonate with customers, particularly in beauty and personal care.

We had some standout performances in skin where we brought in a number of lines that's exclusive to Coles, exclusive to grocery, and you'll see more of that coming in Q4. Encouraging green shoots, lots more to do, and we remain absolutely laser-focused on the customer proposition in each of those categories versus their competitive set, whether they are grocery or non-grocery.

Great. Thanks very much.

Hey, guys. Thanks for the follow-up.

I was just going to ask around supplier price rises. The initial ones on fresh, a lot of them have been sort of expressed in the media anyway as sort of a surcharge increase.

Just trying to understand the timing of those sort of price rises that flow through, or surcharges, versus traditional price rises, which I think you've said the more shelf-ready or shelf-stable products, that's expected to come through going forward. Historically, it's been a 13-week process to get those through.

I just wanted to understand the differences between the two of them, and maybe whether that time frame for shelf-stable price rises might shrink a little bit in the current environment, it doesn't take so long for them to flow through. Thanks.

Thanks for the question, Phil. I think if you call out fresh produce, if we interpret that as your question around fresh, that has quite a different price-setting set of mechanisms than our packaged goods.

Fresh produce items, the pricing on those quite market-driven, and it's set week to week. As our farmers see prices coming through, that then is reflected in those market prices that we would see week to week, and certainly is already reflected in the price.

It's quite different to the packaged goods, where there is a cost price adjustment process that we work through. As we said, it's well-established.

That does tend to have a longer time lag on it because we do work to make sure that every component of that price adjustment that has been requested can be supported by data to show that those increases are valid. Certainly in the current environment where fuel is making up such a big part of that, that's probably a quicker process for us than normal, but there is still definitely a lag versus fresh.

That's what I thought. Thank you.

Thank you for your time this morning. I think we'd say overall, it's been a very pleasing quarter with volume-led, above-market sales growth in Supermarkets and real strength in our eCommerce business.

There's no doubt that the operating environment remains dynamic, and we know that value and availability will be important to our customers over the months ahead. We are well placed to respond to this with our extensive own brand portfolio, our leading eCommerce platforms, and the strength of the infrastructure and capability that sits within our supply chain.

Our strategy is clear, our execution has been consistent, and our team remains deeply committed to serving our customers every day. Thank you, and I look forward to speaking with you again at the full year results in August.