Woolworths Holdings Ltd. announced a decrease in profit, citing a significant slowdown in its Australian apparel business towards the end of the first half of the financial year. Concurrently, heightened investment in its South African food division put pressure on profit margins. CEO Roy Bagattini highlighted that the Australian market is heavily driven by promotions, indicating a challenging retail environment for apparel.
Despite the overall profit decline, Woolworths' South African food operation demonstrated strong performance, with turnover growing by 6.8% and adjusted EBITDA increasing by 5.9% in the first half of the year. This division is seen as a major growth engine, driven by customer demand for fresh, convenient, and premium private-label products. The company has continued to invest in its food infrastructure, including the acquisition of prepared-foods manufacturer in2food, aimed at strengthening its position in premium convenience foods and extending control over its food supply chain.
Amanda Bardwell, Woolworths Group CEO (for the Australian operations), noted the company's strategy in F26 to deliver more value and convenience, which has improved sales momentum, particularly in the Australian Food business during the second half. Group sales increased by 3.6% to $71.5 billion, and underlying net profit climbed by 15.4%. Australian Food sales specifically rose by 4.6% to $53.85 billion. The company recognized an additional $710 million pre-tax provision for historical staff underpayments. BIG W also returned to profit with EBIT of $64 million, a significant turnaround from a $33 million loss in the prior year. eCommerce sales across the group increased by 15.9%.
New CEO Sam Ngumeni is set to take over from Roy Bagattini at the end of September and has already initiated an organizational reset to enhance accountability, simplify decision-making, and increase business agility. This transition occurs amidst a retail landscape characterized by cautious consumers, intense competition, and persistent cost pressures. The company aims for growth through disciplined execution and customer relevance, emphasizing the strategic importance of its food operations.
Woolworths Group reported group EBIT before significant items increased by 12.7% to $3.1 billion, with all trading segments contributing to growth. NPAT before significant items rose by 15.4% to $1.599 billion. After significant items, NPAT increased by 18.1% to $1.138 billion. Basic EPS after significant items was 93.2 cents, an 18.2% increase. The final dividend per share was 52 cents, up 15.6%.
