Coles, which has more than 850 shops across the country, made a first-half net profit of $511 million, down 11.3 per cent on the prior corresponding period.
The result reflected $235 million in remediation-related costs incurred after the Federal Court last year ruled against Coles regarding the underpayment of thousands of salaried managers.
Excluding that item, the net profit was $676 million - below the market consensus - after group sales rose 2.5 per cent to $23.6 billion.
Underlying earnings - before interest, tax, depreciation and amortisation - improved 7.8 per cent to $2.2 billion, which was in line with the market consensus.
Coles CEO Leah Weckert said the interim result was strong, given a very competitive operating environment.
"The momentum in our business has enabled us to continue offering a compelling value proposition to customers, particularly over the festive season," she said in a statement on Friday.
Group sales were led by the supermarkets division, which added 3.6 per cent to $21.4 billion and helped offset a more than three per cent fall in liquor sales to about $2 billion.
Coles will pay a first-half dividend of 41 cents, up from 37 cents last time.
Coles has spent this week defending Australian Competition and Consumer Commission claims that it misled customers with fake discounts on thousands of products.
The retail giant inflated prices before lowering them to above their original levels under its "Down Down" campaign, launched in 2021, the consumer watchdog alleged.
Coles maintained the discounts were genuine during the week-long hearing.
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