Supermarket giant Coles has seen its shares drop sharply following the announcement of disappointing first-half financial results, with a net profit after tax of $511 million, down 11.3% from the previous year’s $576 million. This decline is primarily attributed to a Federal Court judgment that revealed Coles had underpaid workers, resulting in a substantial $269 million in back pay obligations. In addition to this financial hit, Coles is currently embroiled in legal issues with the Australian Competition and Consumer Commission (ACCC), which has accused the supermarket chain of misleading customers through its 'Down Down' advertising campaign.

Despite the disappointing profit figures, Coles reported overall revenue growth of 2.5%, totaling $23.6 billion, with a notable rise in ecommerce sales, which increased by 27% during the period. The company described its online sales performance as an indicator of accelerated digital engagement among customers. Furthermore, Coles declared an interim dividend of 41 cents per share, aiming to reassure investors amidst the challenging financial outlook and competitive supermarket landscape.

The results reflect ongoing challenges in the retail sector, particularly concerning labor costs and regulatory compliance. As consumers increasingly turn to online shopping, companies like Coles are compelled to adapt their strategies to meet evolving market demands while navigating legal scrutiny. The impact on investor sentiment from these developments could influence Coles' future growth strategies and operational adjustments.