Supermarket scramble: Coles crushes and Woolies whacked on FY25 results

After a year where both have been in the spotlight over suspected price gouging, watchdog investigations and industrial action, reporting season was a chance for both Coles Group Ltd (ASX: COL) and Woolworths Group Ltd (ASX: WOW) to clear the air. 

And while the war for supermarket supremacy rages on, there's been a clear victor in the Battle of FY25. 

On Tuesday, Coles posted impressive results with beats across the board and good early sales signs for FY26.

By Wednesday, Coles shares were at record highs.

It was another story for its big rival. 

Despite rallying off the back of Coles' strong result, Woolworths shares were down 14% on Wednesday after its own results yielded a broad miss and unconvincing sales updates. 

It was almost enough for Coles to overtake Woolies on market cap for the first time ever. 

I spoke to Stella McMullen, Ausbil's deputy head of equities research, to get her take on what have been two highly-contrasting results for the grocery giants.

We'll start with the clear winner: Coles. 

Coles FY25 results summary

• Revenue up 3.6% to $44.35bn vs. $44.35bn ests (in line)
• Underlying EBITDA up 11% to $4.05bn vs. $3.96bn ests (2.3% beat)
• Underlying EBIT up 7.5% to $2.22bn vs. $2.10bn ests (5.7% beat)
• Underlying NPAT $1.18bn vs. $1.11bn ests (6.3% beat)
• Total dividend of 69 cps vs. Goldman Sachs ests of 64 cps (7.8% beat)

What was the key takeaway from this result in one sentence?

Sales growth ex-tobacco was strong in 4Q 2025, and the momentum continued into the new fiscal year. Management has attributed it to an improvement in the macro environment, "green shoots in the consumer" and good execution.

Were there any surprises in this result that you think investors need to be aware of?

I think it might be difficult to deliver $250m of savings from their Simplify & Save to Invest program, having delivered $327m already in this FY.

Would you buy, hold or sell Coles off the back of this result?

Rating: Hold

I believe momentum should continue over the next few quarters, and the earnings profile is attractive over the next two years as one-off costs roll off and the benefits from their strategic initiatives come through. That said, I see limited upside risk to consensus estimates off the back of this result.

Are there any risks investors need to be aware of?

The market remains competitive, and we can't underestimate potential risks to earnings from continued investment in price. This was not evidenced in this result, though.

Woolworths FY25 results summary

• Revenue up 3.6% to $69.08bn vs. $69.31bn est (0.3% miss)
• Normalised NPAT down 17.1% to $1.39bn vs. $1.38bn est (0.7% beat)
• EBIT ex-items down 12.6% to $2.75bn vs. $2.78bn est (1.1% miss)
• Final dividend down 21% to 45 cps, total dividend down 41% to 84 cps vs. UBS ests of 86 cps (2.3% miss)

What was the key takeaway from this result in one sentence?

COL is winning market share and executing well; the gap in performance between the two majors is very wide and has surprised the market. It will take time for momentum to shift and for WOW to win back market share.

Were there any surprises in this result that you think investors need to be aware of?

The gap in performance between the majors was inconsistent with the feedback from suppliers.

Would you buy, hold or sell Woolworths off the back of this result?

I believe the negative impact is reflected in the share price today; however, it will take time for momentum to improve, so the decision comes down to your investment horizon.

Are there any risks investors need to be aware of?

If market share doesn’t stabilise, I think WOW might need to invest more in price. A risk of a price war would be matched by COL, which would impact profits for the whole industry, but this is a way of winning back market share.

From 1 to 5, where 1 is cheap and 5 is expensive, how much value are you seeing on the ASX today? 

Rating: 5

But with an improvement in the macro environment, we think momentum can continue. I would also add that there is value in certain sectors, particularly the ones out of favour like healthcare while anything linked to the consumer has re-rated materially and screens expensive vs history. 

Earnings momentum has been positive across consumer stocks which is providing share price support. We think this momentum is likely to continue.