Woolworths posts massive profit of $1.62billion – as it warns Aussies prices will keep rising

Australia’s largest supermarket chain, Woolworths, has seen its profits soar as shoppers struggle with high inflation.

The Woolworths Group, which includes supermarkets and discount retailer Big W, posted profits of $1.62 billion for the year through June, increase of 4.6 percent.

It acknowledged that this happened as customers faced a cost-of-living crisis in fiscal year 2023.

“While the overall operating environment for the Group improved in F23 compared to previous years, global and local inflation effects have presented a new challenge as our customers’ household budgets come under increasing pressure,” the report said.

Revenue increased 5.7 percent to $64.3 billion for the year ended June 25.

Demand for groceries and other necessary household items has remained strong as rising spending has forced consumers to cut back on their discretionary spending, signaling a change in spending patterns after years of Covid-related disruption.

Australian supermarket sales rose 4.7 percent to $41.4 billion, while e-commerce sales rose 2.9 percent to $5.1 billion.

Food price growth started to moderate in the second half, with prices for meat, fruit and vegetables even falling.

Woolworths expects prices to continue to rise in some packaged categories.

Big W had a strong first half, but sales fell in the second half — even above managers’ expectations — as consumers cut discretionary items, especially in the fourth quarter.

“The industry became extremely competitive with higher promotions and discounts,” said CEO Brad Banducci.

So far, these trends have continued into fiscal year 2024, with Woolworths’ food business showing solid growth, but Big W’s sales fell year-on-year.

Woolworths has announced a final dividend of 58 cents per share, compared to 53 cents a year ago.