** Morgan Stanley expects the rapid decline in tobacco sales to continue adding pressure on top-line growth for Australian supermarkets through FY26
** Flags impact of sales decline as broadly consistent with FY25 for Australian retailers
** Tobacco now accounts for just 3–4% of total sales at supermarkets, limiting the overall revenue drag to ~100bps per annum, analysts estimate
** Shift away from tobacco is expected to boost gross profit margins by 20–25bps in both FY25 and FY26 for major supermarket operators, says Morgan Stanley
** Top Australian supermarkets Woolworths WOW.AX and Coles COL.AX set to report results later this month
** WOW stock up 4.1% YTD while COL has gained 11.4%
(Reporting by Rishav Chatterjee in Bengaluru)
((Rishav.Chatterjee@thomsonreuters.com;))
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