Woolworths has begun to reverse years of underperformance as it aggressively lowers prices and ramps up weekly specials to bring customers back into store, undeterred by the Australian Competition and Consumer Commission’s claims of false discounting.
Shoppers added more items to their baskets and returned more frequently to Australia’s biggest grocery giant, chief executive Amanda Bardwell said, after revealing a 3.4 per cent sales uplift to $37.1 billion for the first half of the financial year.
The result represents a marked turnaround for the supermarket giant, which has lagged its smaller competitor Coles for a number of years as Woolworths spread its focus beyond supermarkets and became a lightning rod for unproven accusations of price-gouging.
“We see customers looking for more specials – they’re comparing prices more,” said Bardwell. Underlying inflation has risen to 3.4 per cent, according to fresh ABS figures, while wage growth – which outpaced inflation for two years – is starting to slow.
“We’ve also been able to meet that need in terms of what customers are looking for … really providing the right types of promotions that really matter for those family baskets.”
Woolworths has added more than 350 products to its Lower Shelf Price program that brings prices down on everyday pantry staples for a stable period similar to Coles’ Every Day pricing program, and which has more than 800 products in the range.
“They’re all about those everyday, essential items that make up family baskets: chicken, bread, milk – those real essential products. Customers like the reliability of those lower shop prices,” said Bardwell.
Woolworths’ specials and discounts are due to face scrutiny in the Federal Court in April as the ACCC delivers its closing submissions against Coles’ alleged “illusory” discounts this week. Following a period of rampant inflation in 2022 and 2023 that hiked the cost of living, the competition and consumer watchdog lobbed separate legal action against both supermarket giants in 2024 as Australians reported their suspicions about “specials” tickets.
Woolworths’ group earnings rose 14.4 per cent to $1.66 billion during the first half of the financial year, with net profits 16.4 per cent higher to $859 million compared to the previous half.
The company announced a fully franked interim dividend of 45 cents per share, a 15.4 per cent increase on last year.
Investors cheered the solid set of numbers – described by Jarden analyst Ben Gilbert as a “strong result” that came in “well ahead of expectations” with “momentum back into the business” – by sending the company’s share price more than 11 per cent higher.
Australian food sales from its supermarket stores gained 3.6 per cent to $1.5 billion. However, this figure has been slightly inflated as it cycles off a fortnight-long period of industrial action over Christmas in 2024, which sucked a $190 million hole in profits.
“Woolworths improving sales momentum in its food segment combined with steady gross margins is a healthy sign and further momentum in [the second half of the financial year] is likely to continue,” said MST Marquee lead consumer analyst Craig Woolford.
“However, the benefits from lapping the strikes will fade and may ease sales momentum over the remainder of 2026.”
Discount department store Big W, which has been unprofitable, having fallen far behind its more popular competitor Kmart, showed signs of improvement, with comparable sales growth rising 1.3 per cent driven by clothing sales.
The company has also delivered on its $400 million cost-cutting drive, and Woolworths would continue to cut costs and be more productive, said Bardwell.
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Jessica Yun is a business reporter covering retail and food for The Sydney Morning Herald and The Age.Connect via X or email.
