Woolworths reports mixed H1 FY25 as sales rise and NPAT dips
Australian supermarket chain Woolworths has reported a 3.7% uptick in group sales to A$35.93bn ($22.78bn) in the first half (H1) of fiscal 2025 (FY25), marking growth across all operational segments.
For the 27 weeks ended 5 January 2025, total sales in Woolsworths' core business Australian Food rose 2.7%, with a strong initial quarter slightly dampened by Q2's supply chain problems caused by industrial action.
If not for the estimated A$240m sales hit from these disruptions, H1's figures for Australian Food would have shown an even more impressive rise of 3.7%.
The company's e-commerce sales increased 18.3% to A$4.67bn, fuelled by robust same-day and on-demand services in H1 FY25.
A significant shift in consumer behaviour is evident as orders fulfilled within two hours now account for 31% of e-commerce sales - a figure that has more than doubled since 2024.
Australian Food's e-commerce segment saw a 20% increase in sales, while the online sales of New Zealand Food - another core business - also showed strength with a 14.6% rise.
The company's basic earnings per share (EPS) fell to 60.5 cents from 76.2 cents in H1 FY24.
However, group gross margin saw a decline of 17 basis points due to lower margins in Australian Food and core business BIG W, primarily driven by customer-friendly pricing, heightened promotional activities and increased BIG W clearance events.
Woolworths' earnings before interest and taxes (EBIT) before significant items fell by 14.2% to A$1.45bn, mainly due to reduced EBIT contributions from Australian Food and BIG W, coupled with an elevated LBIT [losses before interest and tax] though slightly offset by gains from Petstock post-acquisition.
The Australian B2B sector experienced a 5.5% sales hike, with PFD Food Services business sales jumping 6.8%. Its EBIT followed suit with a 9.9% increase attributed to sales growth and enhanced utilisation of cross-dock warehouses.
New Zealand Food also enjoyed positive momentum with a 2.7% rise in total sales as the business transformation unfolded, bolstered by strong fresh produce performances and e-commerce that contributed to an EBIT surge of 15.2%.
Net profit after tax (NPAT) attributable to equity holders of the parent entity before significant items plummeted 20.6% to A$739m, mirroring lower EBIT and rising finance costs, but was partially alleviated by reduced tax expenses.
Finally, the group cost of doing business (CODB) percentage swelled by 68 basis points due to increases in Australian Food and W Living.
Within Australian Food, higher wages, item growth, e-commerce mix and increased depreciation and amortisation exerted pressure on the CODB.
Meanwhile, BIG W grappled with stagnant sales which amplified CODB amidst wage inflation and other rising costs.
Woolworths Group CEO Amanda Bardwell stated: '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.
'Our priorities for 2025 are clear and we are already underway. We have an opportunity to further improve the shopping experience for our customers. We are taking steps to simplify our business, and are committed to unlocking the full potential of the group.'
"Woolworths reports mixed H1 FY25 as sales rise and NPAT dips " was originally created and published by Retail Insight Network, a GlobalData owned brand.
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