Shares in Australian supermarket giant Coles Group Ltd. rose to a two-year high on Tuesday as investors absorbed the company’s better-than-expected profit for the 2024 financial year due to improved sales and security against inventory theft.
The Melbourne-based grocer’s stock climbed 3.2% to A$19.05, its highest since August 2022, before easing to trade 1.8% higher at A$18.80.
The company said net profit after tax from continuing operations for the year ending June 30 increased 2.1% to A$1.13 billion ($765.01 million), ending above forecasts of A$1.08 billion.
The surge was mainly driven by supermarket sales that lifted revenue by 4.3% to A$39.04 billion in the period. In the first eight weeks of fiscal 2025, supermarket sales jumped 3.7% as consumers chose to eat at home amid higher household costs.
Price growth in Australia’s second-largest supermarket chain has started easing over the year, with its product inflation, excluding tobacco, dropping 1.5% in the six months through June from 2.9% in the half of December. The reading was 2.2% for the year.
The company announced a final dividend of A$0.32 per share due on September 25, higher than the A$0.30 per share logged the prior year.
Coles Enhancing Inventory Controls
While Coles’ latest full-year earnings showed optimism, its capital expenditure (CapEx) for the period advanced 9.4% to A$1.42 billion as it spent more on store upgrades, including technologies that would help reduce stock losses from theft.
Aiming to curb its cases of shoplifting, the supermarket operator has introduced several technologies to its stores, such as the “Skip Scan” technology at self-checkout terminals, which detects unscanned products in shopping bags.
The grocer has also utilized smart gates that stay closed for customers suspected of theft and the “bottom of trolley” device that advises shoppers to prioritize scanning heavier products. The monitoring technology will be employed in more of the company’s stores this year.
For the next twelve-month period, Coles’ CapEx is estimated to reach A$1.2 billion, with more of its supermarket and liquor stores due to open down under.
