Earnings preview: The key numbers to watch for Woolworths and Coles quarterlies

Woolworths (ASX: WOW) and Coles (ASX: COL) will release their March quarter results on Wednesday, April 30, and Thursday, May 1, respectively, offering key insights into consumer trends, food and beverage pricing, supplier dynamics, and wage pressures.

Both retailers have outperformed the broader market this year, with Woolworths gaining 4.6% year-to-date (rebounding from an 8.5% dip) and Coles surging 14% to record highs. The results arrive on the heels of the Australian Competition and Consumer Commission’s inquiry into supermarket price gouging, which cleared both companies of violating consumer law.

Woolworths: Key Metrics and Investor Focus

UBS projects modest single-digit sales growth for Woolworths but warns of challenges in its Australian Food and Big W segments. Key metrics to monitor include:

• Total sales: Up 4.6% year-on-year to $17.6 billion (UBS is more bullish than consensus, which forecasts a 0.9% drop to $16.6 billion).

• Australian Food sales: Up 3.1% to $13.0 billion, with like-for-like growth of 2.5%.

• Online supermarket sales: Up 16% to $1.8 billion, representing 14% of Australian Food sales.

• New Zealand Food sales: Up 4.3% to NZ$2.1 billion, with like-for-like growth of 4.0%.

• Big W sales: Up 2.3% to $1.02 billion.

• 2H25 guidance: Reaffirms a mid-single-digit decline in Australian Food EBIT.

Investors should focus on Australian Food for clues about consumer behavior, particularly item and volume growth, online versus in-store sales trends, and the mix of private-label versus branded products amid promotional activity. Other areas of interest include the shift from dining out to grocery shopping, Woolworths’ response to supplier-driven price hikes, and its ability to fund promotions while managing profitability. Challenges include A$70 million in projected 2H25 supply chain costs and limited progress on A$400 million in targeted cost savings.

UBS maintains a Neutral rating on Woolworths, nudging its target price to $31.50 from $30.50.

Coles: Key Metrics and Investor Focus

UBS expects Coles to demonstrate resilience despite softer sales projections and a competitive landscape. Key figures include:

• Total sales: Up 3.5% year-on-year to $10.4 billion (consensus predicts 4.2% growth to $10.5 billion).

• Supermarket sales: Up 3.5% to $9.4 billion, with like-for-like growth of 2.8%.

• Online supermarket sales: Up 18% to $1.0 billion, accounting for 10.8% of supermarket sales.

Investors will seek updates on Coles’ automation efforts, particularly its Witron and Ocado partnerships, which aim to lower costs and improve stock availability. Management is expected to clarify how it balances sales growth with margin expansion amid supplier price pressures and evolving consumer trends, such as rising at-home liquor consumption. UBS is bullish on Coles’ cost-saving potential and automation-driven efficiencies, boosting its 2025 and 2026 earnings forecasts due to stronger supermarket margins. Coles’ forward price-to-earnings ratio of 22.7x aligns with the market, closing the historical valuation gap with Woolworths.

UBS maintains a Buy rating on Coles, increasing its target price to $23.50 from $22.35, reflecting higher FY25-26 earnings expectations.

Sector Context and Performance Trends

The S&P/ASX 200 Staples Index has been a standout performer in 2025, rising 4.7% year-to-date while the broader S&P/ASX 200 fell 1.9%. If Woolworths and Coles deliver resilient earnings, effective cost management, and margin growth, the sector could attract further flows as markets gravitate toward defensive pockets of the market.

Coles has significantly outperformed Woolworths over the past 18 months, a trend sparked by its August 2024 FY24 results. These addressed challenges like theft, supply chain disruptions, shrinkage, and spoilage, while gaining traction from the “Simplify and Save” initiative and new customer fulfillment centers. Meanwhile, Woolworths has struggled, with its stock declining after four consecutive underwhelming results (and trading updates). More recently:

• October 2024: First-half FY25 guidance cut by ~10% below consensus, driven by consumers shifting to lower-margin products.

• February 2025: Half-year FY25 net profit dropped 20.5% to $739 million, missing expectations by 4.0%, with the interim dividend cut 17% to 39 cents per share, slightly below consensus.

The chart below illustrates Woolworths’ underperformance relative to Coles, trading at its lowest ratio since Coles’ 2019 listing.

Woolworths vs. Coles share price (Source: TradingView)

Woolworths’ one-year forward P/E ratio of 23.7x slightly exceeds Coles’ 22.6x, suggesting it is the pricier option. However, relative to Coles, Woolworths is trading at a historically attractive valuation despite its recent earnings setbacks. This presents two views: either Woolworths’ weaker performance makes it less appealing, or its discounted valuation signals a potential opportunity for investors.