Woolworths has ridden out 17 days of industrial action and supply chain disruptions to report a group sales lift of 3.7% in its first half-year to $35.9 billion. Yet the supermarket giant’s H1 FY25 results show group EBIT was down 14.2% to $1.451bn, largely as a result of a decline in Australian food EBIT driven by disruption and the cost-of-living crisis.

The supermarket reported EBIT of 12.8% across its Australian Food division. While the one-off impact of 17 days of industrial action and incremental supply chain commissioning and dual-running costs pummelled Woolworths last year, it nevertheless flagged Australian Food EBIT would still have declined by approximately 5% due to price and promotional investment and ongoing inflation in wage and other costs. Woolworths has estimated a $240m sales impact from the supply chain disruptions including $95m from industrial action specifically.

Within the sales figures, group ecommerce continued to rise, increasing by 18.3% to $4.676bn and now representing 20% of sales. Orders fulfilled under two hours now represent 31% of eCommerce sales, more than double the prior year and enabled through a large store network in close proximity to customers. Excluding industrial action, ecommerce DAP growth would have been higher than sales growth.

A win for Woolworths Group CEO, Amanda Bardwell, was the lift in customer sentiment in H2 after the material disruptions of end of 2024. Group VOC NPS of 44 was down six points on the prior year but down a narrower two points on Q1.

In Australian Food, Woolworths noted customer scores in the half were trending positively before being impacted by the ACCC legal proceedings and interim report in September and industrial action in November and December. Store-controllable VOC was more stable during the year with Care remaining the highest component. Customer scores have also been improving in H2 do far as stock flow and availability has improved.

“Customer metrics have begun to improve following a challenging half which was impacted by industrial action and ongoing cost-of-living pressures. We remain committed to providing value to our customers in an environment where household budgets remain under pressure and customers continue to shop around,” Bardwell said.

Bardwell also flagged significant investment in price and promotions as a way Woolworths is looking to provide more value to shoppers. In the last half, the supermarket launched Watchlist, a digital tool to notify customers when products are on special or promotion.

Media, Everyday Rewards and Services also grew strongly in the half. Cartology revenue increased by 15.3% with strong growth across the portfolio including the completion of the Vicinity rollout, delivery of video ad units on the woolworths.com.au homepage and continued growth in digital channels. Everyday Insurance and Mobile customers increased to over one million in the half, growing 12% on the prior year. Australian B2B sales rose by 5.5%, with PFD sales up 6.8%.

Woolworths established a new segment, W Living, which includes BIG W, Petstock, Healthylife, and Woolworths MarketPlus. W Living sales increased by 16.1% year-on-year, with significant contributions from Petstock.

Less strong was BIG W, which made good progress in repositioning its range to provide more value to customers through lower prices and more affordable options in store, Bardwell said. Yet while this helped to drive strong item growth, sales growth was impacted by lower average selling prices and the late arrival of the Spring/ Summer clothing range.

Woolworths also reported BIG W Market’s extended range is driving eCommerce GMV with 40% growth on the prior year. Even so, EBIT declined by 45.9% to $29 million impacted by mix changes to lower priced items, elevated clearance activity and wage cost inflation.

As to the second half, Woolworths noted Australian Food (Woolworths Food Retail) total sales growth of 3.3% in the first seven weeks of H2 F25, driven by a more stable trading environment following the recovery from industrial action, cycling lower growth in the prior year, its collectibles program and ongoing eCommerce growth.

Woolworths is preparing for the ACCC’s Supermarkets inquiry final report. “Customer metrics have begun to improve following a challenging half which was impacted by industrial action and ongoing cost-of-living pressures. We remain committed to providing value to our customers in an environment where household budgets remain under pressure and customers continue to shop around,” said Amanda Bardwell, Woolworths Group CEO.

“Our priorities for 2025 are clear and we are already underway. We have an opportunity to further improve the shopping experience for our customers, we are taking steps to simplify our business, and are committed to unlocking the full potential of the Group,” Bardwell stated.

“While we acknowledge the material impact of the industrial action on our customers and team, we came to an agreement that is fair and sustainable and enables ongoing productivity improvements critical to maintaining competitiveness. In Victoria, sales have not yet fully recovered but availability and customer metrics are returning to pre-disruption levels with ongoing efforts to regain customers,” she added.

“While we continue to optimise our promotional activity, cost-of-living pressures for customers persist with value-seeking behaviours and cross-shopping expected to continue. Livestock costs in red meat are also expected to impact gross margins in the half,” Bardwell noted.

ECommerce is expected to continue to grow as a proportion of the sales mix and simplification and other initiatives are expected to gather momentum in H2.

“But this will not provide a material offset to costs in the half with ongoing elevated cost inflation. As previously disclosed, supply chain commissioning and dual-running costs will continue in H2 and are expected to be approximately $70 million (H2 F24: $20 million). While still early in the half, we expect H2 F25 EBIT (including supply chain commissioning and dual-running costs) to reflect a mid-single digit decline on the prior year,” Bardwell stated.

“While we expect to see further progress in BIG W’s Clothing and Home range reset, improved item growth is being tempered by lower average selling prices despite strong cost control. At this stage, we expect BIG W’s H2 LBIT to be broadly in line with the prior year (H2 F24 LBIT: $40 million).”

With the ACCC’s Supermarkets inquiry final report due shortly, Bardwell added Woolworths will also be going through it thoroughly.