Woolworths, the leading supermarket chain in Australia and New Zealand, has reported a significant $190 million decline in profits for the half-year ending January 5, resulting in a 21% drop in net profit, which now stands at $739 million. This unexpected downturn has been attributed to several factors, primarily industrial action which led to a 13-day shutdown of warehouses, creating a bottleneck in the supply chain. Additional pressures included increased wages and a noticeable decline in customer loyalty.
Woolworths CEO Amanda Bardwell acknowledged the hardships faced by the company due to these disruptions, especially in their Australian Food division. Despite the challenges, she noted the team’s efforts to restore service levels following the disruptions caused by strikes in November and December. Bardwell reassured stakeholders that an agreement had been reached with workers, which she believed was fair and would allow for necessary productivity improvements to keep the company competitive.
In Victoria, while sales have not yet returned to pre-disruption levels, Woolworths is keen on enhancing product availability and customer engagement as it strives to regain its market share. Bardwell emphasised that the ongoing cost-of-living crisis continues to weigh heavily on profits, as customers now seek more budget-friendly alternatives.
Furthermore, increasing livestock costs for red meat are anticipated to add to this financial strain in the upcoming half of 2025. Despite the profit decline, Bardwell mentioned that the impact of industrial action on grocery sales would have been limited to a 5% drop if not for the closures.
To navigate these challenges, Woolworths is setting its sights on delivering greater value to customers. Plans for the year include launching effective promotions and optimising ticket designs to ensure sale prices are more noticeable to shoppers. The strategic focus aims to enhance customer experience in response to current economic conditions and shifting shopping behaviours.