Australia's supermarket industry is often considered a duopoly, dominated by Woolworths Group Ltd (ASX: WOW) and Coles Group Ltd (ASX: COL).
These two retailers control around 65% of the market.
These two companies are also the two largest companies by market cap in the consumer staples sector of the ASX.
Because of their dominance in the Australian market, they could be a strong option for your investment portfolio.
So which is better?
Coles Group Ltd (ASX: COL)
Market Cap: $25.55 billion
P/E Ratio: 23.42
Dividend Yield: 3.55%
Coles share price had held relatively steady to start the year, rising 0.95%.
For context, The S&P/ASX 200 Consumer Staples Index (ASX:XSJ) has fallen 1.48% during this period.
This resilience has possibly come on the back of strong earnings results for the six months to 31 December (H1 FY 2025).
Coles reported:
- Sales of $23.04 billion, up 3.7% from H1 FY 2024
- Underlying earnings before interest, taxes, depreciation and amortisation (EBITDA) of $2.14 billion, up 12.5% year on year
- Underlying net profit after tax (NPAT) of $666 million, up 6.4%
Coles also increased the interim dividend per share by 2.8% to 37 cents.
It has now grown its annual dividend per share each year since 2019.
It's also important to note one key difference between the two companies is that Coles continues to operate Liquorland, Vintage Cellars, and First Choice, whilst Woolworths does not operate a liquor division.
Buy, hold or sell?
Coles has seen its share price grow 15.24% over the last 12 months and it seems brokers think there is more room to grow.
The Motley Fool's James Mickleboro reported earlier this month that Ord Minnett raised its price target to $21.00 from $19.50, indicating roughly a 10% upside.
Broker Bell Potter also has a price target of $21.00 although it has a "hold" recommendation.
Morgan Stanley analysts upgraded the supermarket giant's shares to a price target of $21.70 last week.
Woolworths Group Ltd (ASX: WOW)
Market Cap: $35.95 billion
P/E Ratio: 22.47
Dividend Yield: 3.21%
Woolworths share price is down 3.41% to start the year, dropping more than the S&P/ASX 200 Consumer Staples Index (ASX:XSJ) during that span.
Zooming out even further, WOW shares have dropped 9.14% over the last 12 months.
The latest data for the first six months of FY25 showed Woolworths performance was slightly below its competitor Coles.
Woolworths reported:
- Sales up 3.7% to $35.9 billion
- EBIT down 14.2% to $1.45 billion
- Net profit after tax down 20.6% to $739 million
- Fully franked interim dividend down 17% to 39 cents per share
Buy, hold or sell?
Last week, shares in WOW (and Coles) charged higher after the Australian Competition and Consumer Commission (ACCC) released its final report for its supermarkets inquiry.
The enquiry aimed to improve competition in Australia's supermarket sector and provide recommendations.
It would seem investors were pleased with the results for supermarket giants Coles and Woolworths.
Brokers seem to believe this could be the tide beginning to turn for Woolworths shares after a rough 12 months.
At the time of writing, Goldman Sachs has a buy rating and $36.10 price target on Woolworth shares, indicating a 22.67% upside.
Broker Bell Potter is less bullish, with a $31.00 price target and "hold" recommendation.
Meanwhile, Macquarie has its price at $30.80 a share for Woolworths.
