Woolworths Group H1 Earnings Call Highlights
by Kim Johansen · The Markets DailyWoolworths Group (ASX:WOW) outlined a first-half performance it said reflected deliberate investment to rebuild customer momentum, alongside cost reductions and improving execution, during its FY2026 half-year results call covering the 27 weeks ended January 4, 2026.
Group results: sales growth and higher underlying earnings, but significant items weighed on statutory profit
Chief Executive Officer Amanda Bardwell said the group took action during the half to strengthen its customer offer in “value, fresh, and convenience,” while also pointing to improved stability following leadership and structural changes. Group sales increased 3.4% to AUD 37.1 billion, with all businesses reporting sales growth.
Chief Financial Officer Stephen Harrison said group EBIT before Significant Items rose 14.4% to AUD 1.7 billion, with the group EBIT margin up 43 basis points and margins improving across all trading segments. Management noted comparability benefits from the prior-year period, which included industrial action impacts and supply chain transition costs. Normalizing for those items, Woolworths said group EBIT growth would have been 7.9%.
Group NPAT attributable to equity holders before Significant Items increased 16.4% to AUD 859 million, with basic EPS before Significant Items also up 16.4% to AUD 0.704.
On a statutory basis, the company reported NPAT attributable to equity holders of AUD 374 million, down 49.4%, reflecting AUD 698 million of Significant Items before tax. Harrison said the largest component was a “one-off cost” tied to remediation of award-covered salaried team members following a Federal Court decision on September 5, including interest, superannuation and payroll tax, and within the previously disclosed range of AUD 450 million to AUD 750 million.
Customers remain value-focused; Woolworths invests in price, promotions, and availability
Bardwell said customers remain “value-focused” amid cost-of-living pressures and heightened competition, with consumers buying more on special, comparing prices, and cooking more at home. In Australian Food, Woolworths responded to weaker-than-expected Q1 momentum by increasing promotions on “key family lines,” expanding its lower shelf price range, investing additional hours in fresh, and increasing stock cover on key promotional lines.
Management highlighted several operational and customer experience measures, including:
- Adding 350+ products to the lower shelf price program during the half, taking the range to 800+ products.
- Unlocking 1 million additional online delivery and pickup slots in December ahead of Christmas.
- Increasing weekend store deliveries and holding more stock on key promotions, contributing to a 10-point improvement in “out-of-stocks” Voice of the Customer measures versus the prior year.
Bardwell said Q2 improved relative to Q1, with market share stabilizing. Excluding an industrial action impact in tobacco, Woolworths Food Retail sales increased 4.7% in Q2 and were “driven primarily by item growth.” She said the improved momentum continued into the second half.
In Q&A, management emphasized the importance of “price trust,” noting that Australian Food “value for money” scores were up 8 points year-on-year and had improved progressively quarter to quarter. Bardwell said customer engagement with lower shelf prices was strong, citing unit growth in the program in “mid to high single-digit” for own-brand and “lower double-digit” for branded products.
Australian Food and e-commerce: sales growth, margin dynamics, and profitability improvements
Australian Food sales increased 3.6% to AUD 27.6 billion. Excluding the prior-year industrial action impact, sales growth would have been 2.6%. Harrison said Woolworths Food Group Retail sales growth improved in Q2 (to 3.2%, excluding industrial action) compared with Q1 (to 2.1%), supported by a stronger offer and execution during the Christmas period.
Australian Food EBIT increased 9.9% in H1, though Woolworths said normalized EBIT growth would have been 3.5% after adjusting for prior-year industrial action and supply chain transition costs. Gross margin rose 8 basis points to 28.6%, which the company said primarily reflected the mix impact of declining tobacco sales. Excluding tobacco, gross margin declined 14 basis points, which management attributed to factors including lower shelf price investments, livestock inflation not fully passed through, and supply chain transition costs.
WooliesX sales increased 14.2%, driven by 15.3% e-commerce growth and 8.6% growth from media, rewards, and services. Woolworths also pointed to a 93% increase in eComX directly attributable profit, aided by picking algorithms, improved temperature zones in vehicles, growth in higher-margin on-demand propositions, and efficiency benefits. Management cautioned that the scale of profit expansion included some cycling benefits, including industrial action impacts and the prior-year cold chain investment, and may not repeat at the same pace each half.
Executives also discussed intensifying competitive activity in food e-commerce, citing Coles’ increased focus and competition from “formidable global retailers,” including Costco’s online offering and Amazon’s entry, particularly in customer acquisition.
New Zealand Food and BIG W: transformation progress and improved results
New Zealand Food sales increased 2.8% in NZD, with e-commerce sales up 13.9%. EBIT increased 22.4%, with management citing higher sales, supply chain efficiencies, and cost-saving initiatives, partially offset by store wages and depreciation and amortization growth. Management said Q2 sales were more subdued as market growth slowed, and that New Zealand remained challenging and highly competitive.
In BIG W, total sales increased 2.7%. BIG W sales increased 1.8%, while gross transaction value (including BIG W Market) rose 5.8%. EBIT increased sharply, which Woolworths attributed to a more favorable sales mix, improved seasonal execution and availability in clothing, and strong cost control; Harrison also noted depreciation was below the prior year following an FY2025 impairment. Management said BIG W Market sales more than doubled versus the prior year and reiterated its commitment (first made in August) to be “EBIT and cash flow positive,” while noting the business is seasonally weighted to the first half.
Bardwell said work had started to separate BIG W from group systems to allow it to operate on a platform “appropriate for a discount department store,” while also “providing the group with strategic optionality.” When asked directly about a potential sale or exit, she did not provide further updates beyond the previously communicated approach, emphasizing the focus on the transformation plan and fit-for-purpose technology.
Cost savings, supply chain investment, and capital management
Woolworths said it delivered its AUD 400 million cost savings run-rate target by December, with savings across support office roles, goods not for resale, and marketing and IT spend. In Q&A, Harrison said the group’s costs grew 2% in the half, and that roughly half of the AUD 400 million run-rate initiatives were delivered in H1, helping keep cost growth below sales growth in each trading business.
On supply chain, management provided updates on the Moorebank ramp-up. Harrison said the national distribution centre was now processing around 2 million cartons per week, while the regional distribution centre was at about 1 million cartons in recent weeks, versus a maturity expectation of 2.5 million to 2.8 million cartons. He said commissioning and dual running costs were expected to continue through FY2026 at similar levels to FY2025 and into FY2027, with benefits progressively ramping over the next couple of years and reaching maturity around 2028–2029.
Operating cash flow before interest and tax was AUD 3.2 billion, up 4.5%. Operating CapEx was AUD 913 million, and Woolworths maintained its full-year expectation of approximately AUD 2 billion. The board approved a AUD 0.45 per share dividend, up 15.4% year-on-year. Net debt to EBITDA was 2.7x, and management reiterated its commitment to investment-grade credit ratings (BBB from S&P and Baa2 from Moody’s).
Looking ahead, Bardwell said Woolworths would remain focused on providing value, rebuilding customer trust, and maintaining sales momentum while progressing strategic priorities, with further updates planned at an Investor Day in May.
About Woolworths Group (ASX:WOW)
Woolworths Group Limited operates retail stores in Australia and New Zealand. It operates through Australian Food, Australian B2B, New Zealand Food, BIG W, and Other segments. The Australian Food segment procures and resells food and related products, and provides services to customers in Australia. The Australian B2B segment engages in procurement and distribution of food and related products for resale to other businesses, as well as provision of supply chain services to business customers in Australia.