Woolworths posts profit growth as Lower Shelf Price expands

Woolworths Group has reported a 3.6% increase in group sales to $71.54 billion and a 15.4% gain in net profit after tax before significant items, reaching $1.60 billion for the full financial year, according to the company's latest results.

The company's EBITDA before significant items rose 6.7% to $6.09 billion, while EBIT before significant items increased 12.7% to $3.11 billion. A final fully franked dividend of 52 cents per share was declared, up 15.6% from the prior year.

In the Australian Food business, sales rose 4.6% and EBIT increased 8.5%, with the company attributing growth to improved store execution and customer offers, particularly in the second half. Online food sales grew 18.6%, supported by expanded On Demand delivery services and new technology. In New Zealand, sales increased 2.5% in local currency terms, though the result was tempered by a weaker currency and disruption from store changes. The company's Petstock business delivered a 33.5% rise in EBIT, and BIG W returned to profit after a loss the prior year. Group eCommerce sales rose 15.9% to $10.6 billion.

Woolworths reported a 15.4% gain in net profit after tax before significant items to $1.60 billion, with group sales up 3.6% to $71.54 billion. EBITDA before significant items was $6.09 billion, up 6.7%, while EBIT before significant items came in at $3.11 billion, up 12.7%.

Chief executive Amanda Bardwell said the company's focus on value, convenience and execution had improved customer advocacy and sales momentum, particularly in the second half of the year. "Looking ahead, while we expect the challenging economic environment to continue with household budgets remaining under pressure, our strategy to deliver low prices and the best range and convenience gives us confidence we can be first choice for customers while delivering for our shareholders," she said.

In a separate development, Woolworths said it had added more than 100 products to its Lower Shelf Price program, bringing the total to more than 2,000 weekly specials across 105 additional lines. The company says the average discount on a $150 shop of Lower Shelf Price items is about 16%. Examples of the deepest reductions include 40% off Kirks soft drinks, 41% off Rexona deodorant and Bulla ice cream, and reductions of 5.6% to 12.9% on select own-brand meat lines.

The regulatory backdrop

The announcement comes as the Federal Court considers whether Woolworths misled shoppers with fake discounts under its "Prices Dropped" promotion. The Australian Competition and Consumer Commission has alleged the company breached consumer law on 266 products between September 2021 and May 2023. A similar case against Coles was resolved when the Federal Court ruled the rival supermarket had misled consumers over its "Down Down" campaign, with penalties potentially reaching hundreds of millions of dollars.