Supermarket sales rose by 2.7% during the 13 weeks ending September 27, yet momentum faded as October began. Shoppers, increasingly sensitive to cost-of-living pressures, are shifting their habits and favoring lower-priced alternatives. This trend leaves Coles struggling to match the aggressive pricing strategies deployed by Woolworths, which recently reported a 6.9% jump in domestic food sales.

Management now anticipates that first-half earnings before interest and tax will remain flat compared to the previous year. This projection represents a sharp departure from market expectations, which had anticipated growth of up to 8%. Citi analyst Adrian Lemme noted that the downgrade reflects Coles's ongoing battle to remain competitive against Woolworths, a struggle compounded by rising fuel expenses linked to instability in the Middle East. With Jefferies pointing to Woolworths' superior supplier support, analysts are already questioning how Coles will regain its footing in an increasingly polarized retail landscape.