The result came despite a 3.7 per cent jump in group sales to $22.22bn in the second half of 2023, up from $21.42bn in the final six months of 2022, driven by easing supply chain bottlenecks, product discounts and promotions.

The retailer, which has come under increased scrutiny in recent months amid allegations of price gouging, also declared an interim dividend of 36c a share, fully franked.

Price growth had moderated at Coles, with falling shelf prices for fruit, vegetables and meat. However, milk prices and packaged products were keeping overall consumer prices elevated at 3 per cent.

Speaking to media on Tuesday, Coles boss Leah Weckert recognised the business faced significant pressure due to cost-of-living challenges.

“We acknowledge the scrutiny and debate facing supermarkets right now, particularly as customers face ongoing budget pressures,” Ms Weckert said.

“As the year continues, Coles will continue to work hard to deliver value when Australians need it.”

A very high proportion of customers, Ms Weckert said, were making choices and changes to minimise the cost of their weekly grocery bill.

“We’re seeing [customers] moving into cheaper brands, cheaper cuts of meat, buying more bulk, buying more frozen … we’re definitely getting a lot of feedback from customers that they are eating more at home,” she said.

Ms Weckert said the business’s investments in new automated distribution and customer fulfilment centres had weighed on profitability, while profits for continuing operations were broadly flat.

Group earnings before interest and tax (EBIT) sank 5.1 per cent from the year earlier to $1.06bn. In the supermarket segment of its business, earnings rose 1.6 per cent while the liquor division posted a 5 per cent rise.

Supermarket margins slipped to 5.1 per cent, down from 5.3 per cent a year prior, but were still above analysts’ forecasts for a 4.9 per cent result. Reporting its half year results last week, rival supermarket chain Woolworths posted a margin of 6 per cent.