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Coles (ASX:COL), one of Australia’s largest supermarket chains, reported its 2021 financial year results, here’s what you need to know.

COL’s net profit after tax increased 7.5% to $1,005 million, ahead of the $999.3 million the market expected.

Group Earnings before interest and taxes (EBIT) and earnings per share grew 6.3% and 7.5% respectively, with operating leverage across all segments. This was despite incurring an approximate $130 million in COVID-19 costs in the year.

COL’s growth was boosted by customers spending more time living and working from home, amid the COVID-19 outbreak and lockdowns across Australia. COL’s sales revenue increased 3.1% to $38.6 billion. This included e-commerce sales reaching $2.1 billion. Total group sales revenue, which includes supermarkets, liquor stores and express stores, rose 10.2% on a 2 year basis. When looking at the 4th quarter, sales growth increased 2.1% in supermarkets, 7.1% in liquor stores and 1.2% in express stores.

COL delivered approximately $300 million of Smarter Selling benefits, and total cumulative benefits of $550 million since the commencement of the program. COL’s Smarter Selling program is a 4 year transformation, which includes artificial intelligence and new technology- led solutions throughout stores and supply chains. The program looks to improve store planning and forecasting, transport and logistics solutions, and customer self-service. The substantial saving was achieved, despite supply chain and operating facing challenges due to COVID-19.  

And COL have declared a final dividend of 28 cents per share with a record date of 27 August and a payment date of 28 September.

As for COL’s outlook for FY22, the company expects the vaccination rollout to support normalising consumer behaviours. The first quarter of the financial year remains volatile as most of Australia goes back into lockdown. FY22 also looks to be a significant year of capital and operating expenditure, with $290 million committed to the company’s Queensland facility.

COL is a Macquarie and Morgan Stanley a BUY stock. While Citi and Credit Suisse have COL as a HOLD, and UBS have COL as a sell.