Woolworths Group booked lower profit in the first half, attributed to the 17-day industrial action impacting its supermarket business last December and a trend of customers seeking more value when shopping.

The group’s net profit fell 20.6 per cent to $739 million after earnings before interest and taxes (EBIT) slid 14.2 per cent to $1.45 billion.

Group sales increased 3.7 per cent to $35.93 billion as Australian food sales climbed 2.7 per cent to $26.66 billion, and Australian business-to-business sales jumped 5.5 per cent to $2.98 billion.

“While we acknowledge the material impact of the industrial action on our customers and team, we came to an agreement that is fair and sustainable and enables ongoing productivity improvements critical to maintaining competitiveness,” said Amanda Bardwell, Woolworths CEO.

“In Victoria, sales have not yet fully recovered, but availability and customer metrics are returning to pre-disruption levels with ongoing efforts to regain customers.”

The company said that one-off supply chain commissioning costs and a lower EBIT from Big W also contributed to the earnings decline.

“We have worked hard to deliver value to customers in H1, but we know we have more opportunities to help customers find value when they shop with us, including clearer promotions, improved ticketing and online resources to explain pricing,” said Bardwell.

“We will also look to optimise our range to reflect changing customer behaviours while reducing complexity and elevating our Own Brands to provide more convenient and affordable options for customers.”

New Zealand food sales inched 0.9 per cent higher to $3.9 billion, and W Living sales soared 16.1 per cent to $3.08 billion. W Living comprises Big W, Healthylife, MyDeal, and Petstock.

Revenue from other businesses, including the data and AI business Quantium and various support functions, increased 6.5 per cent to $120 million.

Moving forward, Woolworths noted its Australian Grocery Wholesalers will be downsized to focus on existing customers, including supporting remote communities, after losing its contract with Ampol.

Early results from the second half

In the first seven weeks of the second half, the group saw its Australian and New Zealand food sales rise 3.3 per cent and 4 per cent, respectively, from the year-ago period.

Big W’s sales improved 1 per cent, as lower average selling prices offset item growth.