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

Australia’s biggest supermarket chain Woolworths has seen its profits surge as shoppers battle high inflation.

The Woolworths Group, which includes supermarkets and discount store Big W, recorded a $1.62billion profit in the year to June, up 4.6 per cent.

It acknowledged this occurred as customers battled a cost of living crisis during fiscal 2023 year.

‘While the overall operating environment for the Group improved in F23 compared to previous years, global and local inflationary impacts have created a new challenge as our customers’ household budgets become increasingly stretched,’ it said.

Woolworths empathised with its customers doing it tough as its annual report revealed chief executive Brad Banducci earned $8.6million, as bonuses swelled his pay beyond his $2.6million base salary.

Revenue increased 5.7 per cent to $64.3 billion for the year to June 25.

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

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Australian supermarket sales were up 4.7 per cent to $41.4 billion, with ecommerce sales rising 2.9 per cent to $5.1 billion.

Woolworths has recorded a $1.62 billion full-year profit after tax, up 4.6 per cent from the prior year, a result basically in-line with expectations.

Food-price growth began to moderate in the second half, with prices even dropping for meat, fruit and vegetables.

Woolworths expects prices to keep rising in some packaged categories.

Big W had a strong first-half, but sales dropped in the second half – even beyond executives’ expectations – as consumers cut back on discretionary items, particularly in the fourth quarter.

‘The sector became extremely competitive with higher levels of promotions and discounts,’ said CEO Brad Banducci.

So far those trends have continued in fiscal 2024, with solid growth in Woolworths’ food businesses but Big W sales down on the prior year.

Woolworths declared a final dividend of 58 cents per share, up from 53 cents a year ago.