Woolworths, Australia’s largest retailer, is rewarding its shareholders with a special dividend of 40 cents per share despite experiencing a significant 93% drop in annual net profit. This decline is largely due to substantial impairments related to its stake in Endeavour, a drinks group, and its underperforming New Zealand supermarkets.
Once again, Woolworths’ Australian supermarkets proved to be the backbone of the company, driving strong underlying earnings growth. This performance helped offset flat sales in its New Zealand supermarket chain and a sharp decline in profitability at Big W, which has been severely impacted by cost-of-living pressures that have led shoppers to prioritise value over discretionary spending.
Big W faced a tough year, with earnings shrinking by 90% in 2024 due to these economic pressures and the intensely competitive environment in general merchandise.
Despite a cautious and value-driven consumer base, Woolworths has seen positive momentum from July onwards, with its Australian supermarkets reporting a 3% increase in sales during the first eight weeks of fiscal 2025. This growth is driven by an increase in the number of items sold and modest inflation, with e-commerce continuing to play a significant role.
At Big W, sales for the first eight weeks of the new fiscal year remained flat compared to the previous year. While the number of items sold improved, this was offset by a decrease in the average selling price due to markdowns in the Autumn/Winter range. However, Woolworths expects Big W’s earnings to improve compared to 2024.
Outgoing CEO Brad Banducci, in his final full-year report before stepping down next month, announced a steep 93% drop in full-year net profit to $108 million. This decline was primarily due to $1.7 billion in impairments related to the Endeavour stake and the struggling New Zealand supermarket business.
Woolworths reported a 5.6% increase in full-year sales, reaching $67.92 billion, with an underlying profit after tax—excluding significant items—of $1.71 billion, a slight decrease of 0.6%. Sales and profit figures were largely in line with market expectations. When adjusted for the 53-week trading year in 2024, compared to 52 weeks in 2023, sales rose by 3.7%, and underlying profit decreased by 3%.
As previously announced in January, Woolworths recorded $1.5 billion in significant items against its New Zealand supermarkets and another $209 million in impairments linked to its investment in Endeavour. There was a $107 million gain from revaluing put options over another investment, bringing the total significant items for the year to $1.603 billion, which heavily impacted the statutory full-year profit.
However, highlighting the strength of its core business and its confidence in future earnings growth, Woolworths declared a slight decrease in its final dividend to 57 cents per share from 58 cents in 2023 while also announcing a 40 cents per share special dividend. The final dividend will be paid on September 30.
Mr Banducci, who Amanda Bardwell will succeed as CEO, acknowledged the ongoing cost-of-living pressures on consumers and noted that Woolworths’ supermarket division has been investing in lower prices to support family budgets and drive sales. This effort comes amid customer dissatisfaction with Woolworths supermarkets.
“After a strong first half, we worked hard in the second half to address rapidly changing customer expectations following a dip in our customer scores in the third quarter and a loss of sales momentum,” said Mr Banducci. “Pleasingly, customer scores and sales momentum improved in the fourth quarter, which continued into fiscal 2025.
“In the second half, inflation in our food businesses and Big W moderated significantly as we lowered prices and passed on savings to customers. Compared to the previous year, average prices in Woolworths food retail were down 0.2% and 0.6% in the third and fourth quarters.
“However, cost-of-living remains the primary concern for our customers, and we are committed to doing more to help them by offering greater value on their shopping baskets, supporting them with new digital tools, and providing extra value through Everyday Rewards.”
Within the business, Woolworths’ Australian supermarkets reported a 5.6% increase in sales to $50.74 billion, with earnings up 8.6% to $3.11 billion. Adjusting for the 53-week trading year, earnings rose by 6%.
In its business-to-business food division, led by PFD Food Services, sales grew by 6.1% to $4.6 billion, with earnings nearly doubling, up 93% to $122 million. However, at Big W, sales fell by 2.1% to $4.69 billion, with earnings plummeting 90% to $14 million. The discount department store struggled due to a sharp decline in consumer spending on discretionary items and intense competition in the general merchandise sector.
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