This article first appeared on GuruFocus.
Group Sales: Increased 3.6% to $71.5 billion for F ’26, with H2 sales up 3.8%.
Group EBIT: Increased 12.7% to $3.1 billion, with EBIT margin up 35 basis points to 4.3%.
Group NPAT: Attributable to equity holders before significant items was $1.599 billion, up 15.4%.
Group E-commerce Sales: Increased 15.9%, accelerating to 17.2% in H2.
Australian Food Sales: Increased 4.6% to $53.9 billion, with H2 growth of 5.7%.
Australian Food EBIT: Increased 8.5%, with H2 growth of 7%.
Australian Food Gross Margin: Declined 2 basis points to 28.6%.
Australian Food E-commerce EBIT: Up 70.3% in F ’26.
New Zealand Sales: Increased 2.5% in NZD, with EBIT up 8.8%.
Australian B2B Sales: Increased 4.2%, with EBIT up 13%.
BIG W Sales: Increased 0.9%, with EBIT of $64 million, an improvement of $97 million versus last year.
PETstock Sales: Increased 12.3%, with EBIT up 33.5%.
Operating Cash Flow: Before interest and tax was $6.5 billion, up 5.2%.
Operating CapEx: $1.84 billion for F ’26, with F ’27 expected in the range of $1.9 billion to $2 billion.
Dividend: Final dividend of $0.52 per share, bringing total ordinary dividend to $0.97 per share, up 15.5%.
Net Debt-to-EBITDA: 2.5x, lower than F ’25.
Release Date: August 26, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Group sales increased 3.6% to $71.5 billion, with group EBIT up 12.7% and NPAT up 15.4%.
Australian Food sales grew 4.6% in FY26, accelerating to 5.7% in H2, driven by item growth and improved customer transactions.
E-commerce sales grew 15.9% (17.2% in H2), with e-commerce EBIT up 70.3% and DAP up 99%.
BIG W returned to profitability with EBIT of $64 million, a $97 million improvement year-over-year.
Group ROCE improved to 16.4%, up 2.7 points, and net debt-to-EBITDA improved to 2.5x.
Delivered above-store cost savings of approximately $400 million, with CODB as a percentage of sales declining 22 basis points in Australian Food.
Complementary businesses (PETstock, PFD, Cartology, etc.) contributed around one-third of group EBIT growth.
Strong early FY27 trading: Australian Food sales up 7.6% in first 8 weeks, with momentum continuing.
Moorebank supply chain precinct performing well, with NDC fully operational and RDC ramping up ahead of expectations.
Dividend increased 15.5% to $0.97 per share, with payout ratio at 74.1%.
Negative Points
Group EBIT growth benefited from cycling industrial action; excluding this and supply chain costs, EBIT growth was 8.7%.
Australian Food gross margin declined 20 basis points (excluding tobacco) due to price investment and input cost pressures.
New Zealand H2 EBIT declined 7.7% due to sales slowdown, store operating model disruption, and higher stock loss.
BIG W sales growth was modest at 0.9%, and early FY27 sales declined modestly due to cost-of-living pressures.
Customers remain under significant financial pressure, with over 40% struggling to make ends meet and value-seeking behaviors elevated.
Wage growth remains elevated, including increases for 18- and 19-year-old team members, pressuring costs.
Other segment losses increased 23.4% to $260 million, driven by lower property disposal gains and higher costs.
Significant items after tax of $461 million, largely related to remediation of award-covered salary team members.
New Zealand trading conditions expected to remain subdued, with hyper-competition and customer pressure.
Tobacco sales remain volatile and impacted by illicit market, with no clear recovery expected.
Q & A Highlights
Q: Excluding the estimated Disney Ooshies impact, sales growth still implies an acceleration. Are there signs of pantry stocking in long-life food or nonfood categories that would partly explain the strength?A: Amanda Bardwell (CEO): The strong trading performance in the first 8 weeks is a continuation of the consistent momentum built through the second half, driven by steady item and customer growth. The Ooshies program amplified this by encouraging existing customers to add items to their baskets and attracting new customers to experience the improved offer. While there may have been some extra item growth in pantry areas, the underlying momentum is expected to continue, aligned with the trajectory seen in Q4.
Q: Depreciation and amortization came in much lower than expected, particularly in the second half. Was there a change in accounting policy, and how should we think about it into FY27?A: Stephen Harrison (CFO): There was no change in accounting policy. The lower depreciation is due to a few factors: the benefit from asset impairments in BIG W in the prior year, and the devaluation of the New Zealand dollar reducing the Australian dollar value of NZ depreciation. We still expect modest growth in depreciation moving forward.
Q: On the Aussie Food CODB outlook, we can see the wage impact coming. Can you talk about the benefits that might offset that in FY27, such as offshoring roles or system replacement costs?A: Amanda Bardwell (CEO): The focus remains on driving volume growth and maintaining strict cost discipline. Offsetting the 4.75% wage increase is a strong productivity pipeline across stores, supply chain, and support areas. This includes expanding global support services for efficiency, leveraging AI for productivity (especially in e-commerce), and realizing benefits from the fully ramped-up Moorebank supply chain precinct, which saves store team time through pre-sorted pallets.
Q: On WooliesX, you called out strength in media, rewards, and services, particularly mobile. The contribution was smaller in the second half. Is that normal seasonality, or has the step-up been completed?A: Amanda Bardwell (CEO) & Stephen Harrison (CFO): The second-half performance reflects the benefit of cost savings from simplification initiatives now in the base. The smaller contribution is due to seasonality, particularly in Cartology, which has a first-half skew. Additionally, some cost-saving initiatives started in Q4 of the prior fiscal year, so the full run-rate benefit wasn’t realized in the last quarter.
Q: On the customer offer reset program, this seems like an opportunity to expand gross margins. How should we think about this as a COGS tailwind, and what is the early evidence on sales?A: Amanda Bardwell (CEO) & Annette Karantoni (MD Woolworths Retail): The primary focus of the customer offer reset is driving volume growth, not margin expansion. In FY26, product margin actually saw a slight reduction due to price investment. It is very early days, with only the first ranges rolled out to stores. In one example, a major range was optimized by about 5%, leading to a 13% improvement in availability. The focus is on partnering with suppliers to drive volume and provide dependable prices.
Q: On the strong results through July and August, how did you estimate the 1.5% to 2% benefit from the Ooshies campaign, and where did the incremental growth come from? How will you retain those customers?A: Amanda Bardwell (CEO) & Stephen Harrison (CFO): The estimate is based on comparing week-on-week sales growth during the promotional period against the stable run rate pre- and post-program, and comparing it to the uplift from similar past promotions. The growth came from a mix of existing customers adding items, lapsed customers returning, and increased shopping frequency. Retention is being driven through the Everyday Rewards program, targeted offers, and a strong e-commerce experience to encourage repeat visits.
Q: On the operating CapEx step-up next year, when can we expect lower capital intensity from Woolworths? Is ~3.5% of sales a good benchmark?A: Stephen Harrison (CFO): The $1.9-$2 billion operating CapEx range is considered the right level to sustain assets and invest in growth. While capital has been coming down as a percentage of revenue, the company is still in the midst of its supply chain investment program, including the Sydney Fresh DC and the Melbourne North automated e-commerce facility. We expect supply chain spend to step down in FY28, but the overall envelope is expected to remain around this level.
Q: On the margin outlook for Australian Food, you have an aspiration for EBIT growth ahead of sales. What are the levers to restore margin leadership over the next 1-2 years?A: Amanda Bardwell (CEO) & Stephen Harrison (CFO): The strategy is a sales-driven growth agenda. While supply chain commissioning costs will still impact FY27, they will reduce and move to a net benefit position in FY28. Other levers include growth in high-margin businesses like Everyday Rewards and Cartology, continued improvement in stock loss management, and the improving profitability of the e-commerce business driven by scale and a favorable mix shift towards on-demand and direct-to-boot.
Q: On e-commerce, the DAP margin looks to be closing in on the broader Australian Food average. Do you expect a further narrowing of that differential, and how does the mix of on-demand affect this?A: Amanda Bardwell (CEO) & Amitabh Mall (MD Group eComX): The improvement in e-commerce profitability is driven by three sustainable factors: scale, which is leveraging fixed costs; mix, with growth in higher-margin propositions like on-demand (47% of deliveries now under 2 hours) and direct-to-boot; and productivity, through disciplined efficiency. These drivers are expected to continue improving the profitability of the e-commerce business.
Q: On the store network, store renewals seem low for a 1,000+ store chain. Is there a greater ramp-up coming?A: Amanda Bardwell (CEO) & Stephen Harrison (CFO): The ~67% full store renewals are in line with recent years. However, this number doesn’t include the separate e-commerce renewal program, which adds direct-to-boot and reconfigures back-of-house space. The goal is to maintain a range of 65-80 full renewals per year. Additionally, new store growth is expected to increase to 20-25
For the complete transcript of the earnings call, please refer to the full earnings call transcript.