Australia’s largest supermarket retailer, Woolworths, has posted a $1.62bn after-tax profit for its continued operations in the 12 months to June, up 4.6 per cent.
But the results also revealed a 79.6 per cent drop in full-year profits to $1.6bn. The loss follows the sale of Endeavour Group, the company’s drinks and hospitality arm, which inflated the FY2022 profit result to $6.2bn.
The after-tax result fell just short of analysts’ forecasts for a $1.7bn profit.
As customers faced a drop in consumer sentiment due to cost of living pressures, revenue rose to $64.3bn, increasing by 5.7 per cent.
“The 2023 financial year marked a return to relative stability after several years of material Covid-related disruption,” Woolworths chief executive Brad Banducci said.
“Looking ahead to F24, we expect food inflation in Australia and New Zealand to continue to moderate but will likely remain elevated in some packaged categories.
“We also expect the consumer environment to remain challenging with customers continuing to cut back on non-essential items.”
As suppliers’ costs rose for commodities, energy and labour, Woolworths in turn increased its final prices, especially in packaged items and dairy products.
Flooding also pushed prices for fruit and vegetable higher, although prices moderated in the six months to June 2023.
Sales for Woolworths’ department store brand Big W dropped as discretionary spending took a hit from a slowdown in consumer spending.
The cost-of-living crunch facing Australian households also resulted in higher rates of theft and retail crime in Woolworths stores, contributing to stock loss.
In response, Woolworths has implemented upgrades to its self-checkout technology to reduce instances of theft.
“A key challenge in F23 was rising cost-of-living pressures which impacted our customers and communities and resulted in increased levels of theft and violence towards our team,” Mr Banducci added.
The final dividend for the 2022-23 financial year climbed to 58c a share fully franked, up 9.4 per cent.
Woolworths’ profit announcement follows Coles’ results on Tuesday. The second-largest supermarket chain in the country recorded a $1.1bn net profit for the 12 months to June 2023, up 4.8 per cent on its 2021-22 profit result.