👉 Background: Coles is the second largest supermarket in Australia, with around 28% market share. Recently, Coles and Woolies have been under a heap of scrutiny with both facing a Senate inquiry into price gouging customers, and exploiting suppliers.

👉 What happened: Now, Coles has announced an annual profit of $1.1 billion, which was up over 2% from last year. It also saw sales jump 4.3% to over $39 billion.

👉 What else: Interestingly, Coles’ CEO was downplaying the results, serving up phrases like “Significant cost headwinds”, or “No increase in our profit rate”, and “Wages has increased”.

What's the key learning?

💡Companies in essential sectors are constantly managing tension between corporate success and social responsibility.

💡Coles is trying to maximise shareholder value by cooking up bigger revenue and tastier profit margins. But on the other hand, it needs to demonstrate to the public and regulator that it’s also struggling with the cost-of-living.

💡The challenge is that there isn't strong competition in the supermarket sector. Coles and Woolies hold about two-thirds of the market share of the supermarkets in Australia. Both have achieved profit margins of over 5%. Whereas in the UK, things are a whole lot tighter because of the competition:

• Tesco had a profit margin of 3.8%
• And Sainsbury’s profit margin is just 3%
  

So now Coles is trying to lay low with its growing profit margin.