Good morning, and thank you for joining us for our half-year results call this morning. 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.

We acknowledge their strength and resilience and pay our respects to their elders, past and present. I'm 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 Lauber, our Chief Executive of Liquor.

Moving now to slide three. I'm pleased that we've been able to deliver another very strong set of results in what is a competitive operating environment.

We delivered strong supermarkets earnings growth with continued sales momentum. E-commerce was a key contributor again, with sales growing by 27%.

Our automation programs are delivering tangible benefits, and we delivered cost savings of $133 million through our Simplify and Save to Invest program. Of course, what matters most to us is our customers, which is why the improvements in our customer satisfaction scores across the business during the half was a key highlight for me.

Finally, we completed our Liquorland banner simplification program. While there are challenges in the overall liquor market, we are seeing positive growth across our convenience portfolio, which is really pleasing.

Moving on to slide four and the financial results. We reported group sales revenue of $23.6 billion, an increase of 2.5%.

Excluding significant items, group EBIT increased by 10.2%, and NPAT increased by 12.5%. In supermarkets, adjusted for the competitor industrial action in the PCP and excluding tobacco, sales revenue increased by 6.1%, and supermarkets EBIT increased by a very strong 14.6%, underpinned by top-line growth and EBIT margin expansion of 55 basis points.

Charlie will talk more to the financials in his presentation. Moving on to slide five.

During the half, we maintained a consistent focus on executing against our strategic priorities, which once again underpinned our performance for the period. Let's get into this in some more detail, starting on slide six with our first pillar, Destination for Food and Drink.

We know value remains front of mind for consumers, and delivering on our value commitment to customers remains a priority for us. During the half, we strengthened our value proposition, expanding our range of everyday value products.

We ran a winter and spring value campaign, and our Shop, Scan, Win European glassware continuity programs each delivered strong engagement with our customers. Our Exclusive to Coles portfolio continues to perform well, with sales growth of 5.7%.

We launched more than 500 new products, and the range was recognized with 17 Product of the Year awards. We know our own brand portfolio is a unique differentiator for Coles, and these new products and awards underscore the momentum we are building in quality and innovation across the portfolio.

We also entered into some really exciting exclusive partnerships during the half. One of these was with Marks & Spencer, where we brought a number of their iconic favorites to Australian homes.

This included their well-known Percy Pig and Colin the Caterpillar lollies, which turned out to be our most successful lolly launch ever. Our partnership with Grill'd also proved popular, particularly with the rising fakeaway trend for those who want to recreate their restaurant or takeaway dinner in their own home.

These collaborations broaden our appeal and help ensure we remain a destination for inspiration and everyday meals. We were also pleased with how we executed over the Christmas period, starting with our Christmas range, which showcased more than 340 own brand Christmas products and exclusive specialty drinks.

We worked hard in the lead-up to Christmas to ensure value was felt where customers needed it most. Our $1 seasonal produce lines in the week before Christmas were a simple but powerful example of that commitment.

Operationally, we delivered our highest monthly DIFOT results since December 2020, an important sign of the progress we are continuing to make in availability and overall execution. This leads me to our customer satisfaction scores on slide seven.

As I said at the start, the improvements in customer satisfaction scores were a real highlight, with strong improvement across our key metrics of quality, availability, store look and feel, and price. The big takeaway here is that customers are noticing the changes we are making.

Improved availability, sharper value, and better execution in stores are translating directly into stronger satisfaction scores, and that gives us real confidence as we look ahead. There is always more to do, but we are very pleased with the progress we are making.

Moving now to slide eight and the next pillar of Accelerated by Digital. We reported another strong half in our e-commerce business, with 27% revenue growth in supermarkets, penetration now over 13%, and double-digit growth across all shopping missions, whether that be same-day, next-day, Click & Collect, or our immediacy offering.

We are focused on making sure we have a great offer across all online channels. We've made a lot of progress in e-commerce over the last few years, and customers are responding to this.

We know customers have different shopping missions throughout the week, and the investments we have made allow us to provide them with exceptional service that matches their shopping mission. For example, our CFCs allow us to provide the biggest range, better availability, and improved freshness for those customers who are looking to do their weekly shop.

Our expanded partnership with Uber and our windowless Click & Collect rapid offer provides us with a leading immediacy proposition. During the period, we made investments in our digital assets and are seeing particularly strong growth in our app metrics, with monthly active non-visitors to the app growing by 32% and the app share of e-commerce revenue now at 54%.

Our CFC volumes increased in the half, with sales growth again outpacing total supermarkets e-commerce sales growth. Same-day deliveries commenced in Melbourne in the first quarter and Sydney in the second quarter, and we also had a major catchment extension to Geelong and the Surf Coast in Victoria.

In terms of our immediacy offering, as I mentioned, we expanded our partnership with Uber Eats. We now have up to 17,000 products available to purchase through the Uber Eats app, and the windowless Click & Collect rapid was also expanded to 255 stores nationally.

Overall, our online NPS saw a meaningful uplift, driven by improved availability, fulfillment, and the overall digital customer experience. One of the most important points to make here is that we were able to make all of these investments, grow our business, expand catchments and our immediacy offering, while driving efficiencies through technology scale and a strong operational focus.

We made further improvements to our picking processes in stores, increased orders per van, and installed two key automation technology features in the CFCs, with on-grid robotic pick arms and auto frame loading. It's been a very pleasing half in terms of e-commerce.

Moving now to slide nine and Loyalty. Flybuys remains an important driver of customer engagement across Coles, as well as a key element of our overall value proposition.

During the half, Flybuys exceeded 10 million active members, growing by 6.2%. This highlights the continued relevance of personalized value for our customers.

We were also pleased to see strong growth in our Coles Plus subscriptions, with customers recognizing the additional benefits they receive by becoming part of Coles Plus family, including free delivery, free rapid Click & Collect, and double Flybuys points. Moving now to slide 10 and our Delivered Consistently for the Future pillar.

Our SSI program remains a core part of our DNA. We know the importance of operational efficiency.

Delivering consistent and sustainable cost savings through our SSI program enables us to help offset inflation and reinvest in the customer offer, and we see the benefits of that both in our top line as well as our bottom line. This half, we delivered cost savings of $133 million.

This brings us to around $700 million since the beginning of FY24, and we remain firmly on track to achieve more than $1 billion in benefits over the four-year program. Consistent with previous years, there were many initiatives across different parts of the business that contributed.

Again, a common theme was the use of AI and other technology automation to improve the effectiveness and efficiency of our processes. This leads me to slide 11.

We've been building and deploying AI for over a decade. What has changed recently is the pace of capability and the breadth of where we can apply it.

For our customers, we are already scaling AI to drive more relevant offers and engagement through personalization across the shopping journey. AI is helping us deliver more personalized and relevant experiences, with tailoring engines.

This is improving relevance, conversion, and overall customer satisfaction. In parallel, we're also now moving into the next wave: agentic commerce, conversational AI, and real-time personalization, capabilities that will transform how customers engage with us over time.

We are proving the relevance, timing, and effectiveness of rewards for customers and helping them to find value, whilst improving our promotional effectiveness. In our operations, AI is embedded across operational decision-making, with a clear focus on outcomes to improve availability, reduce waste, and lift productivity.

We're using AI in forecasting, demand planning, and ranging to improve accuracy and availability. In stores and in our e-commerce business, AI is helping optimize rostering, improve workflows, pick efficiencies, and dynamic workforce.

Across our supply chain, AI supports optimization in transport and improved workflows. We're also using AI in stores for computer vision for object recognition and loss technology.

Now looking ahead, we're building an end-to-end optimization capability across the supply chain, from automated DC pallet flows to transport to replenishment, decisions are all made as one system and not in silos. A digital twin also lets us simulate scenarios before we change operations.

Then we can apply this to execute the best plan in the real network. The result is improved availability, lower waste, lower cost to serve, and faster response time to any disruptions.

We're also looking to optimize online fulfillment capacity across our stores, CFCs, and DCs, helping us to decide where orders should flow, how much capacity to allocate, and when to flex resources. Finally, for our team members, we're embedding AI tools that make work easier and more productive.

Our knowledge assistant is helping teams quickly access policies and procedures, and we've rolled out AI productivity tools, including ChatGPT Enterprise and Microsoft Copilot, and we're partnering with OpenAI on team training. It's fair to say that AI is well and truly entrenched within our business, is delivering strong results, and has been for some time.

The pace of change is accelerating, and we are really excited by the opportunities that are emerging, particularly in customer-facing agentic AI, and we will be talking about this more in the future as these start to scale. Moving to the next slide.

Alongside of our financial performance, we remain committed to the role we play in supporting our team members, suppliers, communities, and the environment. Before handing over to Charlie, I would like to cover off some of our achievements in these areas.

I will start with our team members. Through our November team engagement pulse survey, we maintained our highest ever team member engagement score, remaining in the top quartile.

This is a strong reflection of the culture and leadership across the business. Almost 70,000 team members provided their feedback, and it was pleasing to see that delivering for our customers remained one of our strongest areas, with 90% of team members recognizing our commitment to meeting our customer needs.

We also continue to support the well-being of our team members, including through initiatives such as R U OK? Day, where our stores and distribution centers came together to reinforce our care and courage values.

We recently launched round 14 of the Coles Nurture Fund, continuing our long-standing commitment to supporting innovation, sustainability, and growth within the Australian supplier community. We celebrated excellence across our supply base in the 2025 Supplier Partner Awards, recognizing achievements across each of our key trading categories.

Our community partnerships remain a defining part of who we are. This half, we raised more than $1.6 million for Movember and more than $1.8 million for the SecondBite Christmas Appeal, helping to provide over 9 million meals for Australians experiencing food insecurity.

Finally, we continue to make progress on our sustainability commitments. 87.7% of eligible packaging is now recyclable or reusable, and we maintained 100% renewable electricity usage across our operations, and we continue to divert more than 85% of solid waste from landfill.

With that, I'm now going to hand over to Charlie, who will take you through the financial results in some detail.

Right. Thank you, Leah, and good morning, everyone.

I'm now on slide 14, which details our group results. Excluding significant items, we reported group sales revenue of $23.6 billion, an increase of 2.5%; group EBITDA of $2.2 billion, an increase of 7.8%; and group EBIT of $1.2 billion, an increase of 10.2%.

NPAT, excluding significant items, increased by 12.5%. Off the back of these results, the board declared a fully franked interim dividend of 41 cents per share, an increase of 10.8% compared to the prior corresponding period.

This is a consistent progression of shareholder returns over time. Moving on to the segment overview on slide 15.

Let's start with supermarkets. Sales revenue increased by 3.6%, with our value proposition continuing to resonate with customers.

If we adjust for competitor industrial action and excluding tobacco, sales revenue increased by 6.1%. EBIT increased by 14.6%, reflecting the strong top-line growth coupled with EBIT margin expansion of 55 basis points to 5.8%, which was underpinned by a 65 basis point increase in gross profit margin.

The strong gross profit result was achieved notwithstanding the significant investments we made in value during the period, as the annualized benefits from our ADC program, strategic sourcing, SSI initiatives, and the growth of Coles 360. Lower tobacco sales also contributed 37 basis points to GP margin.

In liquor, sales revenue declined by 3.2%. The liquor market remains subdued, and competitive intensity increased through the period, particularly at the big-box end of the market.

During the half, we completed our simple Liquorland store conversion program, and our convenience portfolio, representing around 90% of our store network, delivered positive sales growth. We are seeing a shift in customer behaviors towards convenience-led purchases, and pleasingly, our stores are well positioned in this convenience space.

There is some work to be done to optimize our Liquorland warehouses now that the conversions are complete. Overall, liquor EBIT was impacted by softer top line and $13 million in one-off costs relating to the simply Liquorland conversions.

In Other, revenue relates solely to the product site supply agreement we have with Viva Energy. As outlined in the results release, the PSA, which is due to expire in April, has been extended and is now due to expire at the end of November to allow Viva to complete the transition to New South Wales, WA, and Queensland.

The increase in Other EBIT was predominantly due to the higher net property gains in the prior corresponding period. Turning to operating cash flow on slide 16.

Before discussing the numbers, I want to highlight a timing impact. The half year ended on the 4th of January, and similar to last year, this resulted in an additional payment run in the final week, creating an additional cash outflow of approximately $560 million.

The timing effect impacted several metrics, including cash realization, working capital, and net debt. These metrics will normalize in the second half.

Operating cash flow excluding interest and tax was $1.5 billion, with a cash realization ratio of 69%. Adjusting for these additional payment runs, the cash realization ratio was 94%.

For the full year, we continue to expect cash realization of 100%, with the first-half timing impact reversing in the second half. The working capital movement primarily reflects increased inventory to support availability over the Christmas period, and lower trade and other payables following the additional payment run.

The movement in provisions and other largely reflects the flow provision, which is non-cash but recognized in EBITDA. I'll now move to capital expenditure on slide 17.

Gross operating capital expenditure on an accrued basis was $476 million, a decrease of $66 million compared to the prior corresponding period. We had a higher weighting towards store renewals and new stores across supermarkets and liquor this half, as well as a lower spend in relation to our Victorian ADC.

This was as a result of a milestone payment having been recorded in the prior corresponding period. Pleasingly, our Victorian ADC remains both on time and on budget.

We also concurred lower capital expenditure in relation to our investments in loss technology. As CapEx falls into four key areas: store renewals, growth initiatives, efficiency initiatives, and maintenance.

Within renewals, we completed 160 store renewals across our network, consisting of 33 supermarkets and 127 liquor stores. These included 122 simply Liquorland conversions.

Within growth, we opened six new supermarkets and 11 new liquor stores. We also continue to invest in our e-com business.

Efficiency initiatives included investments in the Victorian ADC, store front-end service transformation, and liquor easy ordering. Maintenance capital included our ongoing refrigeration, electrical replacement programs, and life-cycle replacement of store and technology assets.

We continue to optimize our property portfolio, with net property capital expenditure increasing by $157 million, primarily due to an increase in property acquisitions and developments, and lower proceeds from divestments. To reiterate the guidance we provided at our FY25 results, we continue to expect capital expenditure of approximately $1.2 billion for the full year as we continue to invest in store renewals, digital and technology, and growth initiatives.

Turning to funding and dividends on slide 18. Our funding position remains strong.

At the end of the half, our weighted average drawn debt maturity was 4.4 years, with undrawn facilities of $1.9 billion. As I said earlier, the Coles board declared a fully franked interim dividend of 41 cents per share, which is a 10.8% uplift versus first half '25 and shows a consistent progression of shareholder returns over time.

We will also have a franking credit balance of approximately $600 million after the payment of our interim dividend. Finally, we retained headroom within our rating agency credit metrics and a strong balance sheet to support growth initiatives, with current published credit ratings of BBB+ with S&P Global and Baa1 with Moody's.

With that, I'll hand it back to Leah to take us through the outlook and concluding comments.

Thanks, Charlie. Turning to the outlook on slide 26.

In the first seven weeks of the third quarter, supermarket revenue increased by 3.7%, or 5.3% excluding tobacco. We're pleased with this strong sales result as we can see through the market share data that it represents above-market growth, continuing the sales momentum we have had for some time.

It indicates that in Victoria, we have retained a portion of the customers that we gained as a result of our competitors' [unclear] to -2.5%, continuing to deliver positive sales growth. As I said at the start, the focus for liquor this period is on leveraging our unified brand, simplifying our processes, and improving the performance of our Liquorland warehouse stores.

Overall, I'd say we have had a strong first half and a good start to the third quarter. With that, I'll now hand back to the operator for Q&A.

Hey, morning, team. Thanks for taking my question.

This Leah, I suppose mostly for you, question on the trading update, but just on your comments around market growth, just interesting if you give us some color potentially ex Victoria, and how within that trading update you think some of the key categories in terms of sort of your health, beauty, versus fresh versus sort of the food category? Thank you.

Thanks for the question, Ben. As I said, we're quite pleased with the first seven weeks for two reasons really.

One is that based on the market share data, we can see that it's above market growth, and that means we have retained a portion of those customers, which means our Victorian sales numbers actually aren't that far off where we are from a national basis, and then we have grown some share on top of that. The data point we received on Wednesday is entirely consistent with the market share data that we have, which is that our major competitor has also performed ahead of market, but that share is not coming from us, and we can see that it's coming from others.

I think the second reason that we're pleased with that first seven weeks is that it just really shows consistency. For those seven weeks, this year we've got 5.3% ex tobacco, last year it was 4.5%, the year before that it was 6.4%.

That represents really strong sales growth year in, year out, and we are really focused on continuing to drive the flywheel that we talk about, which is strengthen the top line, unlock the operating leverage, and then reinvest that back into the customer offer. That's what we're intending to do.

In terms of strength of categories, food continues to be very strong for us. We're seeing good strength across the fresh areas, and you'll see on the customer satisfaction scores that quality is really stepping up.

That is actually directly related to our fresh categories, and I would call out meat as one area where we are seeing outperformance in the market in that space. In the non-food area, that's been a real focus for us, and we would say we're quite encouraged by the emerging trends that we're seeing in that area.

We have reconfigured categories in the half to respond to some of the pricing dynamics that we are seeing in the broader market, which means that we have introduced a lot more lines onto EDLP. We know that we're a convenient destination to pick up many of these non-food products.

You think, yeah, cleaning products, your paper products, your baby products, it actually makes sense to grab those when you come in to do grocery shop. We're taking very much a category-by-category approach.

To maybe just give you a bit of color on that, we've invested, for example, into our Cub wipes and our Ultra range in cleaning, baby and cleaning private label, and that has driven really strong volume growth for us in that space. We've also taken action on some of the proprietary lines in pet, for example, to be more competitive with some of the players in the market that have recently moved into that space, and on the back of that, we've seen double-digit growth on those lines.

Really encouraging in terms of where we're headed there and more to come.

Morning, Leah. Look, I'd like to pick up on that, particularly slide seven.

It's a fantastic looking slide. It's brilliant in terms of customer resonance, and you highlighted it as one of your key highlights.

Can you bring it to life a little bit? What does it actually mean?

330 basis points, can you put it in context as how big a jump that is? Availability, they look really impressive, but I don't know what to make of it.

What does shine for me a little bit is price, up only 180 basis points. I don't know if that's good or not, but your gross margin was very powerful.

Could you have gone a bit harder on price? Can you basically bring slide seven to life?

Because that looks an incredibly powerful chart, great execution, great improvement in margin. Can you bring to life what drove that?

Maybe, given that you are higher margin than your competitor, how much firepower that you've got going forward to maintain that sales momentum that you've got? Big in that question, but if you could have a go at it, that'd be really appreciated.

Thanks, David. We will try and unpack it.

It was a highlight, I think for all of us as a team, because we do have a fundamental belief that if we're increasing customer satisfaction, it's one of the things that helps us to drive transactions and engagement into the store. I think it is a real combination of the execution focus we've had, but also it's the benefits starting to flow through some of the transformational investments that we've made over a long period of time now.

Think, the benefits we're getting from the ADCs, the CFCs, but also the step-up that we've made in terms of the renewal investments. Maybe I might ask Anna and Matt to give us a little bit of color and well, maybe just work through the slide in order of what the headings are.

If we start with quality, do you want to cover that one?

Hi, David. It's Anna.

When it comes to quality, obviously it's important across the store, but very very important in fresh, and we've been running a really big fresh transformation program, and that really has seen us take an end-to-end review of quality. Taking every touch point on where we might degrade that and how we would look to solve it.

Actually just to give you a bit of a sense of what we've been doing, we've been working through our supplier base to make sure that we have the right suppliers that are fit for the future, and we've gone into deeper end-to-end partnership with that. We've also coupled that with an upweight in our technical resource to really work with those suppliers to really unlock quality and cost.

We've really then also focused, particularly in meat, around our manufacturing network to make sure it's actually closer to stores. Think WA for WA, Queensland, we've got a pork facility there now, which means that we're faster and we get fresher product to stores and then therefore give life to customers in store, and we know that's how they measure quality when they see life at home.

The other bit we've done is we've invested quite significantly in store team training and also central team training to really focus on quality, coupled with the work that Matt and the team have been doing in supply chain around faster, fresher flows that mean we are flowing product from our supplier base to the stores in a very nuanced way that means we get better life. On the back of that, it's probably to hand over to Matt to give a bit of flavor on that because reducing lead times has been a key priority.

Might hand to you before we then talk about availability as well.

Sure. Thanks, Anna, and morning, David.

Look, it makes it easier when Anna and the team are super focused upon right supply, right range by store, and the right price and promo plans, and that does then sets us up to leverage the changes that we've made around our supply chain operations and our store operations. The game we're playing here is speed.

The faster we can move products, the fresher it will be, and importantly, the less waste and markdown we also get. Our faster, fresh flows is essentially a shift away from bringing products in and racking and stacking to then wait to come and pick it later.

We really are moving things through the supply chain as fast as possible and measuring in hours as opposed to days, and then simply tying that in with the store execution where we've got the right display space and the right resourcing to really make sure that the product gets in front of the customer in the least possible time. I would also add we've now got a couple of years under our belts of our replenishment forecasting system.

This was the RELEX implementation we did, and the final part of our integrated replenishment plans team. They get better at forecasting, too.

It's a number of parts that drive the difference in quality. In answer to your question around is 330 basis points a shift, it is a really big shift.

If I think about the 390 basis points we've then seen improvement in availability, that is at levels that previously we've not really seen. They are extremely good results.

On availability itself, you probably think about this in three areas. The first, and I've talked about this again in the past, a great focus on foundations.

This is where we've made the operating model changes, and we've got the commercial teams really focused upon range, supplier collaboration, the supply chain team focused upon forecast and the logistics of moving product, and the store teams super focused upon replenish. It's the consistency with which the teams now work together that's driving the difference.

We've got a really solid base that we can build on. Importantly, our supplier inbound fulfillment, our DIFOT, is at a six-year high, and through the Christmas period where it traditionally falls away, we saw it maintain a level.

We've got stability, not just consistency there. The second part then that enables is to really drive investments as making the difference.

That's the ADCs, as Leah talked to, and the CFCs. We are putting more cartons and more products through those ADCs to drive the benefit of not just efficiency, but service.

We've also now rolled out our transport management system, which has enabled us to have better control and visibility of our fleet, and that means we are better at picking up from suppliers through Coles Collect, and we're better at delivering to stores as well. Those investments drive the difference.

The final part, which I think is probably where we're going to see the next level, is really a shift from being reactive to being proactive. This is where we're starting to use data and AI to look for gaps before they occur.

Where can we see the problem before it becomes an issue in the store? We're able to identify at a store SKU level potential out-of-stocks and target team members to go and manage the inventory closely so that we can then be proactive around availability and prevent any issues before they've even occurred.

I think that's then the next level: foundations first, technology driving the difference, and then the AI and data really becoming proactive rather than reactive. That sets us up for even further improvement in availability.

Anna, I might throw to you for the store look and feel, the third part.

There's a number of key areas that go into the store look and feel metric. A couple of things I would say driving this certainly is our renewal program.

If I take you back to '22, we would have done 40 renewals. This year we will complete 70.

Actually what we have done is maintain the blueprint now some years to get consistency. What that does is give customer a consistency in every store they go into, but it's also enabled us to take the cost per renewal down to do more of those, certainly a key focus.

We've really started to address what I would call some of the long-term underinvested stores as part of this program, and we're seeing really good progress in customer response there. The other bit that's in this metric is ease of shop, and we've focused on the shelf edge through our range program and macro space.

We've really stepped on both navigation of space and aisle. The one big thing here, we've really thought about the integration of omni-channel all to actually remove the friction we see with customers in store through that.

Good progress there. The biggy is we've fixed up our checkout space through the service transformation program, so that has been a real meaningful step on from a customer satisfaction.

I'd say there's lots of initiatives driving this. We are certainly focused on how do we continue to elevate this and how do we take it to the next level.

Much more to do, but we're pretty pleased with where we are. Then if I come to the final one on price, funnily enough, actually it is always the hardest metric to move and moves the slowest from a customer perspective.

We are really pleased with 180 basis points. That's come from all the work that we've talked about before around fewer, deeper, more targeted promotions, removing the noise and making it easier for customers to shop.

We're seeing the increase in EDLP in the right categories really driving that price satisfaction. Again, the work we have done not only on simplifying the range, but also tailoring the range to the store has made it easier for customers to find value and find the products they want on shelf.

A number of key things. Now, there's an awful lot more to do in here, and we're really focused around that.

It's pleasing to see that the work we've done over the last kind of 18 months really starting to come to fruition here. They would be the big drivers, David, across those four.

Thank you. Good morning, Leah and Charlie and team.

Maybe just a question just on the first seven weeks. Sorry, you dropped out, Leah, when you were talking in your outlook.

Do you think you were hurt by cycling the Jan 25 period in that Woolworths is now indicating that they were hurt in Jan 25, did Coles benefit there and hence you're cycling against a period there which actually means that 3.7 could be a bit stronger in that you're getting some Vic industrial action tailwind? My question is really more around liquor, just in terms of like-for-like sales are down 2.5% to start the year.

Oh, sorry. Yes, please, Leah.

Sorry, we're losing you a little bit, the team, for a second here or there. Apologies for that.

Shaun, can you—

You're in and out.

Hear me? I'm going to go ahead and answer the question.

Oh, Shaun, are you hearing us okay?

Yep, we can hear you now. Yep.

Wonderful. Okay.

I might reiterate the points I made when Ben asked the question. We are definitely still cycling over some disruption from the industrial action last year in the in the January period.

We are pleased, though, with our first seven weeks of sales performance, and there's really two reasons driving that. Based on the market share data, what we have reported today is above-market growth.

That means that we have retained a portion of the customers that came to shop with us last year, and we have grown some share on top of that. What we received on Wednesday is entirely consistent with that market share growth, with that market share data, I should say.

Our major competitor has also performed ahead of market, but that share is not coming from us, and we can see in the market share data where that is coming from. We we feel that we have the right pitch in terms of the customer at the moment, because we are we are retaining customers and we are stepping it up.

The second thing we're really pleased about on the result is just the consistency, which is something we really prioritize. If you look back in prior years, those first seven weeks, we've reported 5.3% ex tobacco today, that was 4.5% last year, and it was 6.4% the year before.

That represents really strong sales growth year in, year out that we are delivering. We believe that is part of what we're managing to get to work through the strategy of the flywheel of strengthening the top line, unlocking the into the customer offer.

Did you get all that, Shaun?

Got you. We got most of that, and I think across the two answers, I think we've got it.

My question is around liquor, just in terms of your like-for-like to start the year is down 2.5%, your earnings were down 37% in the first half. You've called out the aggression from Dan Murphy's as Dan Murphy's remains aggressive on price and really tries to re-establish its sort of, yeah, price leadership, which was quite existential for them.

How does Coles Liquor actually perform in terms of does your big box just continue to sort of suffer? Just curious around the outlook for earnings.

Should we be anticipating earnings to be down another 30% again? You've got a fixed cost base there and a competitor that's quite aggressive.

Just curious around the outlook there, please.

We won't be giving any guidance on where the EBIT will go, but let me make a few comments. We're pleased that we've completed the 222 Liquorland conversions as part of the simply Liquorland project.

Along with that, we have reset range and we have reset value mechanics in our stores. Ultimately, that entire program of work has really been about how do we attract customers into our offer.

I have to say it's early days, we only finished this process in the middle of December, but early days, we're very encouraged by the NPS uplift that we are seeing. It is a very significant and material uplift that we are seeing in customer satisfaction, and that tells us that those changes are really resonating, which is the first thing you have to achieve with your customers.

Now, there is no doubt that the backdrop to all of that is the market is very challenging. We have a subdued market, which is a combination of a structural shift, which is generational around consumption of liquor, but you've also got the impacts in there of cost of living.

Certainly in Q2, we saw elevation in the competitive intensity in the market, and that disproportionately impacted our large box, the Liquorland warehouse stores, which is only about 10% of our network. What we were really pleased about is even though those stores were impacted, the 90% of the network, which makes up the convenience formats of Liquorland and Liquorland Cellars, that component of our network was in positive growth.

You combine that up with strong customer scores and positive growth in the heart of our network, we think that that is actually really positive in terms of setting ourselves up longer term to lean into what we are seeing is quite a few convenience trends coming through in liquor purchasing. Now, that being said, we've got work to do on the warehouses, and that's going to be a big focus for us over the next 6 to 12 months.

Apologies. Hi, Leah and Charlie.

Just want to follow on in terms of the liquor commentary. One of the things you'd talk to there is lower consumption of liquor, a structural shift.

I'm just wondering in supermarkets oral GLP-1s seem to be coming down the pipe and may be cheaper, which could drive increased uptake in your customer base. How are you thinking about the impacts on demand across the supermarket store, particularly in impulse categories, please?

It's a great question, and one we've been discussing quite a bit as a team. If I come up a level, we're actually seeing a huge trend from customers generally around health full eating.

We're seeing that play out in our offer that we have in stores today. Things like the fact that coconut water is up over 30% on sales, the fact that we're getting growth out of health powders and supplements.

We've seen a shift even just in the last 6 months in the penetration of fresh produce that is hitting customers' baskets, and you've got snacking fresh produce items like baby cucumbers, snacking carrots, celery sticks, they're all in double-digit growth. We are looking at that customer and seeing this behavioral change as there is a shift, again, a bit of a generational shift into health full eating.

We're excited by that. We think that's a really big opportunity and actually plays to many of the strengths that we have in the fresh areas of the business, but also the way in which we're leaning into our convenience business.

If you think about our fresh ready meals that we have in the dairy section and frozen meals, our Perform meals in particular are growing really really strongly in that space, and they're dietitian-designed meals that actually tailor the nutritional content to nutrient-rich and high protein. With that as the backdrop, we're already starting to make a shift with a lot of the product development that we're doing and also the ranging work that we do with suppliers to bring in more healthful options in every category.

We look at GLP-1, and we're observing closely what's happening overseas. What we are seeing from those customers is actually what they're really looking for is solutions.

They want to find nutrient-rich food in the supermarket, and the supermarket that helps them to navigate that as easily as possible. One of the pieces of feedback we hear is it's really hard to navigate your supermarket shopping as a GLP-1 user.

They have the real potential to be a winner here, and that's what we want to lean into.

morning, guys. Just got a question on the gross margin.

It was up 65 bips, and I understand you've made some restatements there. I guess I'm just trying to square away the comment that you're investing in price.

Could you maybe just step us through the moving parts on the gross margin? Because it's obviously a pretty big move there.

I guess quite different to what Woolworths reported a couple of days ago.

Right, thanks thanks, Tom. Firstly, I just want kind of lead off with the restate was a prior period restatement, we didn't actually restate anything for for this half.

Look, we're really pleased with the progression in gross gross profit margin. As you'll note, 65 basis points.

If we look at the drivers, what are the drivers that are actually sort of leading to that sort of growth? Firstly, we're actually seeing the annualized benefits of the investments we were making in the ADCs, and specifically this half, Kemps Creek.

If you recall, Kemps Creek was in ramp-up last year in FY25. What we're we're seeing at the moment is both the ADCs you know at business case in the in this FY26 year, and we're definitely seeing benefits in the first half and we'll continue to see that in the second half.

Strategic sourcing and SSI benefits again are two really important drivers in terms of how we look at gross profit margin. SSI, you would have seen that we delivered 100 and 813 million sorry, $133 million this half, and you know a good portion of that goes into GP.

In fact, I think you know we're we're really pleased with that particular program. Coles 360, Coles 360 was actually in double-digit growth for the half, and that is on the back of a number of halves now of double-digit growth, we're pleased with how that sort of tracking.

Then we've also called out previously the mixed benefits from tobacco. As tobacco sales are lower, that contributes in terms of a gross profit margin benefit, not gross margin dollars, but gross profit margin.

We're actually really pleased with how they're sort of tracking. The ADCs, obviously the implementation cost, we successfully removed and unwound those implementation dual running costs, and that created a benefit for the half.

Look, we're we're we're we're you know at this time, and as we did, we continue to sort of make these targeted investments in value, and therefore we've been investing in value that's allowed us to do that, which is also driving that top-line growth that you're seeing in our results.

Thanks. Can I just clarify the SSI benefit, how much came through gross margin versus CODB, of the 133?

Look, typically it's been, as over a longer period of time, it's been a third, two-thirds: a third in GP and two-thirds in CODB. This half was a little bit more weighted to CODB, for example, it's a little bit more weighted to CODB and more like a quarter in GP and three-quarters in CODB.

Morning, everyone. Could I just follow on from Tom's question on gross margin?

I think the message here is that gross margin would have declined if not for mix, Coles 360, SSI, the ADC benefit, etc. Can I just confirm that that is the case?

Then you're investing in value for customers, which is great. Do you think you're getting enough support from the supplier base to continue to do that and reward what has been a period of very strong execution from Coles?

Maybe I'll start that question, and Anna can talk to the supplier piece. We haven't done the add-up specifically on the gross margin.

I think one of the biggest drivers in the gross margin expansion is the tobacco impact, which is the 37 basis points. Yes.

That obviously is a very significant mix impact in there. Then you've got the initiatives that we've been doing that Charlie outlined, like the ADCs, the Coles 360, strategic sourcing, etc.

We have made investments into value, and so that is definitely an offset in that line. A big one during the half has been in the red meat space as we've seen costs increase in terms of cost of good on that, and we know that's really important for customers that we haven't passed all of that through into retail.

What I would say is it's a core job of ours as management to make sure that we're just managing that GP period to period, and we put in place a plan that works to have a look at what do we think the impacts will be and therefore what initiatives do we need to hit with the right degree of timing to be able to get those benefits coming through. We're pleased with the overall result that we've been able to get there.

Anna, did you want to talk about the relationship with suppliers?

Happy to. What I would say, Michael, is that engaging with our supplier base more broadly to optimize the range and strengthen the customer offer is business as usual for us, and we're incredibly focused on that, and that won't change.

I won't go into any specifics on the commercials, cuz that wouldn't be appropriate, but what I would say is that we are incredibly focused on working collaboratively, taking a much longer-term view to drive a real meaningful step change in our offer and our commercials collectively, and it's about getting further ahead together, taking a real end-to-end view of our businesses. In a way that accelerates our true differentiation, and that's really where we've been focused and working with our supplier bases on, and that has taken a fully collaborative, cross-functional approach, not just a trading approach.

We're taking it from a supply chain, from an in-store perspective, and we're really looking cradle to grave as to how we think about that going forward. More work to do, but we're absolutely working with the supplier base on that.

Michael, what you're actually seeing is actually our 3D strategy actually in action. That flywheel effect, right, where we're making very deliberate, targeted investments in programs in GP, cost discipline in our CODB, allowing us to reinvest that back into the customer offer, driving top-line sales and getting that operational leverage and efficiency.

Because all through that, what you actually saw was also an expansion in our EBIT margin bottom line. It is really our 3D strategy in action.

Good morning, Leah and team. I'm interested in the comments about the market share performance.

It is a great result and interesting how it's played out for both Coles and Woolworths. I assume you're referring to supermarket market share.

I'd be interested in how much work you're now doing on other definitions of the market if we look at results from Chemist Warehouse or Bunnings or the strength in dining out more generally. Maybe the bigger question is how do supermarkets ensure they don't lose share from other retailers as well?

Thanks, Craig. It did cut out in the middle, but I think we've probably got the gist of it.

Yes, we were talking about supermarkets market share when we were making those comments around the outlook growth. Obviously it's a much more competitive and broader competition market than it was 10 years ago.

The likes of Chemist Warehouse, Bunnings, and I think we could probably, based on the comments that you've just made, also talk about things like QSR in that mix. For us, the approach that we've been taking is to really break that down category by category.

Even within the non-food space, being very particular about how we think about the different categories in there, and I'll let Anna maybe talk to that one. Certainly on the food front, we continue to expand our convenience options for customers, and we actually introduced a number of new products into both the meat range, but also into frozen and convenience dairy over the half, which are really leaning into that.

I mentioned the Grill'd burgers, they're a great example of where we can actually bring share back into the supermarkets channel by giving a product to customers that they feel like it's something that they might eat when they're out, but actually they can prepare it in their own homes. We've seen fantastic growth in our convenience-based meals out of the freezer section, for example.

That's an area that we've expanded significantly. It is a focus area for us.

Those categories that we're talking about there, they are in double-digit growth for us, they're outperforming the rest of the supermarket. Do you want to talk a bit about non-food and how we think about the different competitors there, Anna?

Of course. Craig, I think we've spoken about this quite a lot.

It is a clear area of focus for us. What I am pleased is we're starting to see some real green shoots coming through in both sales performance and market share.

When we look at that, we look at supermarkets market share, but more broadly, we look at kind of health and beauty and our pet business at a total market read, because as you said, our competition is far broader than the supermarket space. I think what we're pleased about, the progress has really been driven by a couple of things.

I think sharpening our value and moving to a trusted pricing position through EDLP has made a marked difference. In the quarter, we moved 400 lines in that space, and we made 1,900 value bays in store to really emphasize the value we have, and we're starting to see that come through.

We've really focused on range where it matters, in pet and baby and in beauty, thinking about nutrition, that's really come through. We're using the CFCs very strategically to go deeper on range that really matters, as well as a bulk strategy, which really means that we are competing with others outside of the supermarket arena in terms of both neutralizing the value, but making sure that we keep the volume within our business.

I think in baby, we've talked about the importance of that, and Leah mentioned we've been really doubling down on Cub, our own brand. Actually, we've invested in both value and quality, and we're seeing that now being the number one both volume and value line in those categories.

Then on pet, as we've said, we've done a lot of work on both value and bulk, and that is playing through. We ultimately know, as Leah said, we are the right convenience spot for customers to buy these categories.

We actually will take a category-by-category approach and make sure that we are being really tailored where we need to put innovation in, where we need to deal with value, and where we need to deal with range. Certainly not a one-size-fit approach, and we're taking a very much a total market view in these categories, rather than the supermarket lens.

Morning, Leah and team. Wanted to follow up, I know this has been a bit of a discussion so far, but particularly around sort of the forward-looking thoughts on the capacity to reinvest.

As you've spoken about, GP margins are up fairly materially, EBIT margins are up fairly materially. I know there's sort of one-offs and things dropping out that are helping that, but on a sort of go-forward basis, how are you thinking about now the sort of capacity to reinvest from an operational point of view?

I know prices has been a bit of a focus, but just sort of more broadly in the suite of options you have to reinvest from an operational point of view, whether it's kind of service or store ops or loyalty, yeah, how are you thinking about sort of your flexibility now, you have that margin expansion to reinvest, and sort of where the more meaningful opportunities are from here, please?

It's a great question, and I think the expansion that we have got in the margin does give us flexibility as we move forward. I think we've been fairly clear in all of our results presentation that we intend to maintain competitiveness, and so we do continue to monitor very closely price, and not just from one competitor, but from a full suite of competitors depending on the category that we are talking about, and we will continue to do that.

However, we have even, just in the last seven weeks, been what I would say is nuancing our operating model. That's something that's just BAU for us, which is we look at performance, we look at where we see some opportunities, and we will put money in to help us to capture opportunities.

A good example of that would be we've actually seen some real strength in our Sunday trade, and as a result of that, we have made the move to invest more into store remuneration to help us to support that, and from a category perspective in the store, investing into the online space because we can see that there's latent capacity there that we can access. We're not afraid to put some investment in to really capture that.

Then is particularly through Flybuys, and we will flex on that to get the right outcome that we want. I'm told that you might have missed part of that cuz we're struggling with line clarity today.

I'll just reiterate that one of the things that we've noticed coming into the first seven weeks of the calendar year has been real strength on Sunday trade in our stores. We have, as a result of that, made additional investments into store remuneration, our team, to help us to capture the upside of that, and in particular in the online space.

Thank you, Leah.

Morning, Leah and Charlie and team. Just mine's a bit of a follow-on actually around cost growth.

On my numbers, excluding implementation costs, you had 6.6% cash CODB growth in the half, and there are a lot of moving parts in there, but I just wanted to walk through. It was a bit of surprise on the upside to me, that cash cost growth.

I acknowledge you've had a pretty big online channel shift, that would be a higher cost channel. You just talked Sunday trading, and there's obviously loading there, labor hours in store.

Given you had $100 million of SSI benefits, which is the three-quarters of the 133 in the period in CODB, I'm just surprised that cost growth is running that high. If you could help us understand sort of why that is, and if that is the path that should continue, or if there's some one-offs in there that we need to adjust for.

Thanks.

Right, well Bryan, thanks for the question. Look, as when we look at CODB, we look at as a percentage of sales, and I actually think we are tightly bounded over a number of years now, in terms of as a percentage of sales, particularly if you exclude the sort of D&A element of that.

Cost discipline in our business is very much part of our DNA, right, and you've seen that through our SSI program. Leah mentioned earlier, since FY24, we've actually delivered over $700 million of that.

That's going to continue. We're going to continue delivering on that, and we're going to continue delivering around that sort of $250 million a year in SSI benefits going forward.

Look, we did successfully unwind the implementation costs, as you did call out, and that was a clear positive. We have been making very deliberate strategic investments in our customer offer.

Including our CFCs, which are now fully embedded in our cost base, they're delivering results and in line with expectations. You're seeing that result fall to the bottom line.

We're actually making very deliberate investments in data and technology, which is all about improving that customer experience and online growth and omnichannel growth really across the board. With these investments, they are driving our top line, and one of the things that I do sort of look at, as I look at the P&L really, including GP and including our CODB.

What we're seeing is these investments are driving not only EBIT growth, but margin growth in our business.

good morning, Leah and team. I've got a question around the CFCs.

You do mention that the CFC sales growth was ahead or outpacing your total online or e-commerce growth. Can you put some metrics around that just to give us a sense of how much better New South Wales and Victoria would be doing online versus the rest of the country?

Part of that answer just makes me wonder if you are outpacing online within Victoria. It sounds like it wasn't quite enough to get your Victorian sales growth ahead of cycling the industrial action, because I think you did call out that Victoria was a little softer than the national rate of growth.

You just sort of put those two pieces together for us.

Richard, it's Michael here. I did get the first part of the question, which was about CFC growth, and then I missed the second part of the question.

Maybe I'll answer the first part first, and then maybe you can follow up and just clarify what the second part of the question was. We're not giving specific growth rates for the CFCs.

If I take a step back and talk about proposition types, where we've got Click & Collect, where we've got same-day delivery, where we've got next-day delivery, and where we've got immediacy, I think the really pleasing part was that all of those offer types were in double-digit growth throughout the first half. Then next-day delivery, which obviously the CFCs form part of, is still by far and away our largest offer type.

To be still getting really strong growth through that, with the CFCs being a driving factor, is really pleasing for us. The proposition continues to ramp up and continues to get really strong customer feedback.

I think that when you look across the positive feedback that we're getting from customers across range, availability, and freshness, it's great to see that the customers are seeing the differentiation that is in that offer. We're getting really good growth.

The operating metrics are in a really good spot in terms of Ocado partners globally, we're the top-performing partner on key operational measures. As Charlie mentioned at the start, we're continuing to invest in that proposition when you look at things like on-grid robotic pick, there's other efficiency measures.

We're getting really strong growth. It's becoming a really important part of our proposition.

The NPS is growing. An important part also in that as part of being an omnichannel retailer is that we've seen as those volumes have come out of stores and gone into the CFCs, the NPS in store has also improved, which speaks to the benefit of the CFCs, not just as a sales driver, but as a really key part of an omnichannel fulfillment network.

Would you mind just clarifying the second part of your question?

My second part was just reconciling that commentary with the comment that Victoria was not growing as quickly as the rest of the country. I realize that it was in part because of the industrial action.

Just trying to square those two pieces together. Just as a little adjunct to that, at what point are you completely clear of any lingering sort of headwinds from last year's industrial action for Woolworths?

When are you in sort of clear air there so we're no longer having to make adjustments for that issue?

Thanks, Richard. I think that is the million-dollar question.

As we shared, if we go back to when all this was unfolding last year, our big expectation was that there was going to be a cohort of customers that experienced the industrial action where they only came to us because it wasn't convenient to shop somewhere where there was really poor availability, and it's likely that all those customers have just returned back. Then there was a cohort of customers who are making an active decision between us and our major competitor where the stores are quite closely located, and then there were our online customers that came to us.

It's really the two second buckets that we have been working over the course of the last 12 months to put together a plan to say, how do we make sure that now that we've had those customers come and shop with us, that we can retain them? What we've seen in this first seven weeks of data is that we have been successful in retaining a proportion of them, but we are definitely still going over the top of some of the disruption for last year.

I think I'm hopeful that we're sort of past it. We aren't spending a lot of time trying to pull it out of the numbers, if I'm honest now.

We're just cracking on with continuing to drive sales and do what we need to do. My expectation would be that Q4 in particular should be very clean.

That's the important one, cuz obviously there's a lot of comparisons with your rate of growth versus Woolworths, quarter by quarter, and it seems like it's made a difference obviously for the first seven weeks. That's going to impact third quarter, but effectively your answer is all clear in the fourth quarter, that's what's important.

That's my expectation, and obviously, we didn't actually receive all the sales that were disrupted as part of the industrial action last year, and I think you're seeing some very interesting reversions going on in the market share data because of that.

Good morning, Leah and team. My question's just on liquor again.

Just wanted to touch on the gross margins. I guess surprised to see them up in the half.

I think you had 21 basis point headwind from range optimization costs there as well. I think underlying, they're probably up 40 basis points or so, if that's right.

I think you would have been lapping a strong period last year as well. I guess how have you managed to drive that improvement in the liquor gross margins in the half?

Then just wondering on your trading update, the sales down 2.5%, are you able to give any indication of whether you're losing share there, what's your liquor market data showing in the first seven weeks? Thanks.

Thanks, Peter. The line was a bit garbled, let me play back what I think we're answering here.

The second question you had was around what's our viewpoint on market share, and then the first part was around the expansion of the gross margin, which I might get Claire to answer. Maybe I'll just start on the market share issue, though.

The data that we have available these days for market share in the liquor market post the changes that were made to the ABS data that's available to us is quite poor these days, it's actually difficult for us to have a view on that until we see our major competitor come out with their results. At this stage, we probably couldn't give you a clear view on that one.

On the gross margin, Claire, I might ask you maybe to cover that one off and how we've achieved the expansion.

Thanks, Leah. Q2 was obviously a intense competition quarter.

We were managing price and promotion intensely through the quarter with a focus to offer compelling offers for our customers. Despite the competitive intensity, we were really pleased that we thought we struck the right balance between driving sales and managing margin, with delivering the gross margin result of the 17 basis points improvement.

Hi, guys. My question was just on the online business.

Woolies called out that there'd been a step-up in competition from all the various players in there. Is that sort of what you're seeing?

Your growth rates are very strong. Are you seeing sort of reactions now from a competitive point of view that are maybe higher than they were in the last 3 to 6 months?

Thanks.

Thanks, Phillip. Firstly, in terms of our own offer, when we look at whether it's customer acquisition or investment in the customer offer, we haven't increased the investment relative to the prior year.

We've obviously had very strong sales growth, the level of dollars that we're investing with customers has gone up. That's a good thing based on the sales growth.

Our investment in the customer offer as a percentage of our sales hasn't gone up, I wouldn't say that we are investing more. In terms of competition, where I would say that there's been an increase in competition is probably on the immediacy platforms, because depending on the platform, you've seen more competitors in the grocery space enter, which more competitors leads to more competition.

That's why we've taken a really proactive step of expanding our partnership with Uber. That's something that will allow us to partner more closely with Uber, giving a better offering in terms of range, being able to partner more closely on things like loyalty and range.

That's something that's a world first for Uber in terms of the way that we're partnering. We think it's something that's going to allow us to have differentiation in this market as it relates to immediacy and ensure that we have a leading customer offer with strong economics.

Whilst there might be increased competition in certain parts of the market, I think we've taken some really proactive steps to ensure that we've got a winning offer.

Hi, morning. Thanks for the follow-up.

Just another one on liquor. It sounds like obviously probably doing pretty well given the price and competition is more focused across 10% of the portfolio.

Just interesting in how you're seeing the price index across the residual 90, a smaller format, where you think you're doing better, cuz just anecdotally, your pricing probably seems much sharper than the market there, and I'm wondering if that's where the risk is if your competitors go after the smaller formats, which has probably been left alone a little bit at the moment?

It's a great question, Ben. We're definitely seeing a good uptick in our customer satisfaction around value and price in the small format stores, and we have been very sharp on KVIs there.

As we've said, we think that with the shift to convenience, building brand loyalty to Liquorland in that convenience format will be really key going forward, and the value proposition that we have in there is a really important part of that.

Oh, thanks. Just one quick one, please.

Just on tobacco, I think we've seen a bit of a crackdown in recent months on illegal tobacco shops. Are you seeing any slight improvement yet coming through in your tobacco performance?

It's obviously still a big drag on sales.

Sales week to week are pretty consistent now for us, and they have been for the last 6 months. We have seen some slight improvements week to week when we've seen a couple of the crackdowns, particularly in Queensland and WA, but I'd probably describe it as quite marginal, and it doesn't tend to have longevity around it, can go for a matter of days or a couple of weeks, and then we tend to see it revert back.

That's why sort of overall we're still in a sort of a similar position to what we reported at Q1.

Thanks for taking another one. Charlie, I just wanted to pick up on a comment that you made about the CFCs being embedded in the cost base.

Just want to understand exactly what that means. Last year you called out $40 million of effectively start-up costs for the CFC model.

How do we think about that going forward? Look, I'm not asking for specific numbers on that, but are there still some costs in the P&L that will come down over time, or has that flipped to a positive contribution?

Then just generally, what's the profitability of your online business look like right now, noting that your competitors disclose margins and they've effectively doubled year-on-year?

Yeah. Michael, let me take that.

Great question. A couple of things.

Firstly, let me go to the CFC side of that equation. We are really pleased with the financial performance of the CFCs.

They're absolutely in line with our expectations. As we've said, we're seeing great volume growth as Michael articulated a little earlier.

What we have seen now in financial performance is the second half of '25 was better than the first half, and certainly continued improvement half-on-half and year-on-year in the CFCs. Any of those costs, they absolutely fell away.

There is no lingering costs from that perspective. All I was really mentioning when I mentioned that CFCs is that they're now in the cost base.

It's actually part of our business going forward. They're fully embedded there.

I would just encourage again, as I said earlier, there are elements that go into GP, there are elements that go into CODB, and that changes. From our e-com business generally, again, really pleased with the growth, a positive contributor to earnings, and from that perspective, we've seen the bridge actually drop to the line.

You would have seen our e-com business now is growing at 27% this half. Last half, it was a similar sort of very strong growth rate.

In that time, we've not only grown earnings, we've absolutely grown our EBIT margin through that perspective. That's the lens which I would look at in terms of the profitability of our business.

Hi, Leah and Charlie. Just a follow-up on the inflation pass.

Without getting bogged down on the technicalities of how Woolworths and Coles measure it, it was surprising to see Coles measure accelerated in 2Q versus Q1, whereas Woolworths measure decelerated in 2Q versus Q1. Perhaps there's some elements in your basket you can talk to that may have added to inflation.

What's your perspective on that inflation outlook over the next 12 months or so?

Thanks, Craig. We did see it accelerate 30 basis points, as you've highlighted, quarter-on-quarter.

I probably would say that over time, ours has tracked quite closely to what we see in the CPI data, which gives us some confidence around how the reporting that we do actually aligns to that. The most significant areas of pressure for us from an inflationary perspective have been in the red meat space, beef and lamb livestock prices coming in.

We haven't passed all of that through to consumers, but some of it has moved through, particularly in the lamb space. We've also seen a bit of inflation in the dairy, chilled desserts, and milk, some of that related to capacity constraints in the market around yogurt.

Equally, there's been others on the other side of the ledger. Eggs has come off now that we're past the avian flu impacts.

We've still got deflation in quite a few of the non-food categories where there continues to be very intense price investment across the market.

Oh, thanks. Just a quick one on depreciation and amortization.

I think before you had said it would rise by $115 mil this year, and only went up by 46 in the first half. How should we kind of think about that for the second half or the full year?

Look, thanks, Tom, for that sort of question. Look, we would expect the second half to be around that sort of $50 million increase.

We're probably expecting, if you think about the full year, these things are not always a precise science in terms of cuz they do vary on when capital investments and things land, but depreciation is probably more like $100 million $100 million or thereabouts for the full year of '26.

Great, thank you.

Thanks for taking the follow-up. Might be one for Anna.

There's obviously an ACCC case going at the moment, I don't expect you to comment on that specifically, but just wanting to sort of get your thoughts around value perception impacts that might come through from all the press coverage, but particularly how you're thinking about red versus yellow tickets longer term. This might be increasing a bit of distrust in some of those red tickets, and whether you need to pivot a bit more to high-low, I'd just be interested in how you're thinking about the composition of your promotional program going forward.

Thanks.

Thank you, Bryan. I won't comment on the case, I don't think that would be appropriate.

I think that we've remained really focused on how do we give our customers great value across the entire basket, and making sure we've got the right mechanics in every category. As we've said, some categories we've had to move more onto EDLP.

The program we've been running around actually doing fewer, bigger, bolder promotions and that into connectivity with EDLP seems to be really working for customers, and we can see that through some of those areas. I think, look, we're just really focused on actually using data and AI to work out how do we get the right promotions to meet the right customer cohorts and how do we think about that longer term.

Actually what we are seeing is that the work that's done in range is making it simpler for customers to find value, and obviously our own brand growth in the quarter around really driving quality and value is another lever we have to really simplify that and on an ongoing level. Look, we're really focused.

The outcomes will be the outcomes of where we are on the ACCC, and we'll work through that, whatever that may be. Again, it comes back to making sure that we're doing the right thing across the basket, not in any particular category, but lowering the cost of shopping and giving customers the right value in the right way in the right categories.

I don't know whether you want to add anything, Leah.

I think that's a good answer.

Great. Thank you for joining us this morning.

In summary, we'd say we're very pleased with the financial results and the strategic achievements that we've delivered over the last half, including strong supermarkets sales and EBIT growth, and strength in online. The fact that our automation and operational efficiency programs are now delivering really tangible benefits, the improved customer satisfaction scores, and the completion of the Liquorland banner simplification.

We're seeking to be laser-focused going forward on what really matters to customers both in the short term and the long term, and we know that if we do that, we will continue to move the dial in each period. We know that's what is going to drive our top line, translate to sustainable earnings, and create long-term value for our shareholders.

Thank you for your time this morning, and I look forward to speaking to you again at our third-quarter results in April.