Woolworths interim 1H25 results revealed a 20 per cent drop in net profit after tax (NPAT) to $739 million and a 14 per cent drop in group earnings before interest and taxes (EBIT) to $1.45 billion. CEO Amanda Bardwell said the results were disappointing and announced there would be $400 million in cost cutting.
The impact of the 17 days of industrial action before Christmas on Australian Food sales was around $240 million, as well as $95 million on group EBIT. Sales in Victoria are yet to fully recover from the action.
Snapshot
- Group sales: $35.9b, up 3.7%, 3.2% if Petstock and industrial action are excluded on prior corresponding period (pcp);
- Group EBITDA: $2,956m, down 4% pcp;
- Group EBIT: $1,451m, down 14.2% pcp;
- Group NPAT: $739m, down 20.6% pcp
“Customer metrics have begun to improve following a challenging half which was impacted by industrial action and ongoing cost-of-living pressures. We remain committed to providing value to our customers in an environment where household budgets remain under pressure and customers continue to shop around,” Bardwell said.
The EBIT figure reflected the industrial action, supply chain commissioning and dual-running costs, and price and promotional investment.
The ongoing work to revive Big W’s performance has been largely unsuccessful, with EBIT down 46 per cent on pcp.
eComX sales were also impacted by industrial action but its overall growth was 20 per cent, with convenience propositions like Same Day, Direct to Boot Now, and MILKRUN driving growth. Orders fulfilled under two hours now represent 31 per cent of eCommerce sales, more than double the prior year and enabled through a large store network near customers.
Bardwell said one of the biggest challenges was consumer perception of Woolworths’ pricing and the major change in consumer behaviour of shifting where they shop depending on the best value.
“While we continue to optimise our promotional activity, cost-of-living pressures for customers persist with value seeking behaviours and cross-shopping expected to continue. Livestock costs in red meat are also expected to impact gross margins in the half,” she said.
“We have also begun to simplify our above store Support Office which is expected to lead to annualised gross cost savings of approximately $400million by the end of calendar 2025. This is in addition to our ongoing store and supply chain productivity program which provides some offset to annual inflation.”
Woolies shares are down seventeen point five per cent since August last year, and the ACCC hasn’t released its final report into its investigations yet - that’s due round about now.
