Coles boss Leah Weckert says outsourcing jobs to India critical to fight online retail giant Amazon

Coles boss Leah Weckert has defended the company’s move to offshore hundreds of jobs, saying it was critical to compete with online retailer behemoth Amazon.

The nation’s second biggest supermarket chain took a hit from rival Woolworths’ wildly popular Ooshies collectibles promotion at the start of the new financial year, but Ms Weckert is focusing on Coles’ fast-growing online operation, which she said was “incredibly strong” during the campaign.

It comes just weeks after Coles confirmed it would outsource jobs to India through a multi-year deal with global consulting firm Accenture.

Speaking as Coles reported full-year results on Tuesday, Ms Weckert said it had “a pretty bold agenda” for digital customer engagement.

“Part of that is driven by the capabilities that we’re seeing coming into the market through other large digital players. I’d call out Amazon,” she told The Nightly.

“(Amazon) obviously brings a lot of their global capabilities to Australia in terms of the digital engagement that they have with customers here.

“To effectively compete, we need to have digital capabilities that are on par with that, and it’s not easy to find the scale of capability here or be able to get it at the pace that we might want.”

Coles has a market capitalisation of $32 billion. Amazon is worth $US2.83 trillion ($3.96t).

Coles reported a one per cent lift in net profit to $1.09b in the year to June 28, including a $235 million hit relating to a Federal Court fine last year for underpaying staff. Excluding significant items, net profit rose 13.7 per cent.

Ms Weckert said value-seeking shopping behaviours were “here to stay” as households face higher interest rates amid the fuel crisis.

More than half of customers were buying more specials, Ms Weckert said, citing internal research, with 50 per cent spreading their grocery trips across multiple retailers to find the best value, while 21 per cent were buying more in bulk.

Ms Weckert said stretched households were also using artificial intelligence for price comparisons and cooking more at home.

She also took aim at the nation’s excessive regulatory environment.

Ms Weckert said there were opportunities to simplify regulation, pointing to more than 220 pieces of legislation that apply to the supermarket giant.

“Those (legislation) can vary across States as well, and so it creates additional complexity to manage a different set of rules in WA versus Victoria for example,” she said.

“There are real opportunities to simplify that compliance load that is on businesses.

“The issue with compliance load is that it does put upwards pressure on prices for consumers because it’s making the cost to run the business higher.”

At its 870 supermarkets, sales increased 3.7 per cent to $41.5b, with Coles saying it successfully cycled the impact of Woolworths’ industrial action in the prior corresponding period and achieving market share growth for the year.

Excluding tobacco, grocery sales increased by 5.1 per cent.

Online grocery sales rose 26.4 per cent to $5.6b, which now accounts for about 14 per cent of Coles’ entire supermarket revenue.

But flagging sales across its struggling liquor division — which recorded a 3.3 per cent slump to $3.55b for the full year — reined in group revenue growth at 2.8 per cent to $45.58b.

Ms Weckert said liquor’s perfomance was below its expectations, but that it had established a clear plan ahead.

“We will be focused on creating a more integrated food and drink experience across loyalty and e-commerce, optimising the store network with greater emphasis on supermarket co-location, and simplifying the operating model,” she said.

Coles’ annual report released along with the financial results on Tuesday showed Ms Weckert lost $414,000 in short-term bonus due to two court losses, while other current and former executives — including former chief executive Steven Cain — also forfeited incentives totalling $1.66 million.

The Federal Court in September found Coles and Woolworths did not comply with their obligation to keep accurate employment records — including rosters, overtime and other entitlements owed under the retail award — of salaried workers.

More recently in May, Coles was found to have misled shoppers with illusory discounts on grocery staples like yoghurt, butter and toothpaste.

Providing a trading outlook, Coles conceded Woolworths’ Ooshies campaign — which sold out nearly two weeks before it was due to conclude — kept a lid on growth as it entered the new financial year.

“Sales momentum was well ahead of 4Q FY26, with a temporary moderation during a competitor’s collectibles campaign in late July and early August,” Coles said.

“Following the end of the collectibles campaign, sales recovered quickly back to levels consistent with 4Q FY26.”

Coles said it would open 45 new supermarkets in “infill locations and high-growth corridors” and renovate 150 stores over the next two years.

These projects, which include the continued development of an automated distribution centre in Victoria, will collectively lift Coles’ capital expenditure to $1.55b this financial year.

eToro APAC lead analyst Josh Gilbert said Coles had done well to cut costs from its business — $311m during the year — but warned fuel, wages, and supplier costs were still rising.

“Coles has shown it can keep prices down and protect profit, but doing both again this year will be harder,” he said.

Coles declared a a fully franked final dividend of 37¢ per share, taking the total to 78¢.