The country’s biggest retailer, Woolworths Group
(ASX:WOW), has joined rival Coles in reporting a double-digit boost to profits amid the most inflationary period the sector has seen for 40 years.
Coles reported a 17% rise in earnings for the six months to December half on Tuesday and Woolies went one better on Wednesday with a near 25% jump for the half year ending January 1.
Coles lifted its interim dividend 9.1% to 36 cents per share, while Woolies boosted its payout to shareholders 18% to 46 cents per share, up 7 cents from the 39 cents paid for the December, 2021 half year.
Woolies said demand for groceries and essential items remained robust as rising prices and subsequent cost-of-living pressures forced shoppers to pull back on discretionary spending.
In its statement on Wednesday, Woolies said its first-half result benefitted “from a focus on improving our customer shopping experience, restoring our operating rhythm, the non-recurrence of material COVID costs in the prior year and strong seasonal trading.”
The company said net profit attributable to continuing operations, excluding one-off costs, was $845 million for six months, compared with $676 million a year earlier.
Woolworths was helped by a 2.5% jump in total sales in its core Australian Food business to $24.39 billion, with gross margin jumping 48 basis points to 30.7%.
Also boosting the result was the continuing improvement in the performance of its BW department store chain which boosted its EBIT to $134 million for the half from $25 million (which was Covid-affected).
Total sales rose 4% to $33 billion for the six months. Group online and e-commerce sales fell more than 9% for the half, echoing similar experiences at other retailers.
Woolies statutory result fell 88.1%, but that was against the prior half year’s result which included gains from the demerger of Endeavour Group.
Woolies said it benefited in the half from a customer focus on affordability and availability as cost-of-living pressures continue. It also said most customer metrics improved despite supply-chain challenges, and that it got a boost from material coronavirus-related costs that didn’t need to be repeated.
Looking ahead, the company said the fiscal second half was off to a strong start and that sales growth has been robust so far.
However, it said it expected earnings growth in the second half to be lower than the first half, as the company cycles a more normal trading period in the first half of 2022.
Woolies shares ended the day up 2% at $37.45.
