Woolworths reaps $1.6 billion profit, despite consumers cutting back

(Source: Bigstock)

After posting a $1.6 billion full-year profit, Woolworths says it is “cautiously optimistic” moving forward despite evidence customers are cutting back on spending.

Group sales reached $64.3 billion, up 5.7 per cent while tax-paid profit from continuing operations improved 4.6 per cent to $1.6 billion and EBIT of $3.11 billion, up 15.8 per cent.

Across its Australian food division, sales increased 5 per cent to $48 billion, with second-half sales increasing 7.6 per cent, reflecting elevated inflation.

Australian B2B sales grew 17.4 per cent to $4.3 billion, with its wholesale distribution business PFD registering sales growth of 28 per cent due to strong trading with existing customers and new customer acquisition.

Big W sales grew 8 per cent to $4.7 billion during the year, however, second-half performance was below initial expectations as customers cut back on discretionary items.

In New Zealand, sales grew marginally by 4.6 per cent to NZ$7.9 billion reflecting challenging trading conditions coupled with higher wages, wet weather events and supply chain interruptions.

The retailer has begun rebranding Countdown Supermarkets to Woolworths New Zealand and has started transitioning its Onecard loyalty program to Everyday Rewards.

Woolworths CEO Brad Banducci said the year marked a “return to relative stability” after several years of material Covid-related disruption.

“Despite the more stable environment, our overall customer experience was inconsistent, impacted by lingering supply chain challenges, and more recently by the impact of inflation on value for money perceptions.

“While overall customer demand has been remarkably stable, we are increasingly seeing our customers become more careful in their spending patterns, particularly our Saver Families and in more discretionary categories,” he said.

“Looking ahead to FY24, we expect food inflation in Australia and New Zealand to continue to moderate but will likely remain elevated in some packaged categories.

“We also expect the consumer environment to remain challenging with customers continuing to cut back on non-essential items.”

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