In This Article:
Release Date: February 25, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Woolworths Group Ltd (WOLWF) reported a 3.7% increase in group sales to $35.9 billion, with strong e-commerce growth of 20%.
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The company has a significant reach, with 83% of Australia's population living within a 10-minute drive of a Woolworths store.
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Woolworths' Everyday Rewards program continues to be a strong performer, with over 12 million active members across Australia and New Zealand.
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The company has made progress in reducing its environmental impact, achieving a 12.5% reduction in scope 1 and 2 emissions in H1.
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Woolworths Group Ltd (WOLWF) is focusing on simplifying its business operations, aiming for annualized growth savings of approximately $400 million by the end of 2025.
Negative Points
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Group EBIT declined by 14.2% to $1.45 billion, primarily due to challenges in the Australian food segment.
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The company faced significant supply chain disruptions due to industrial action, resulting in an estimated $240 million in lost sales.
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Woolworths Group Ltd (WOLWF) experienced a decline in customer advocacy and satisfaction due to inconsistent supply and service disruptions.
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The company is dealing with ongoing cost pressures, including a 4.25% wage increase and higher input costs, particularly in the meat category.
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Despite efforts to improve, Woolworths Group Ltd (WOLWF) is still facing challenges in recovering customer loyalty and sales momentum in certain regions, particularly Victoria.
Q & A Highlights
Q: Sean Cousins from UBS asked about the $400 million cost-saving initiative, questioning if it is sufficient given Woolworths' larger headcount compared to competitors and whether these savings will be reinvested to offset inflation and promotional pressures. A: Amanda Bardwell, CEO, explained that the $400 million savings target is appropriate for running a sustainable business. She emphasized that simplification is an ongoing process to ensure efficiency and that decisions on reinvestment will be made based on market conditions.
Q: David Arrington from Bank of America expressed concern about Woolworths' declining EBIT despite sales growth and asked what measures will be taken to improve underlying performance. A: Amanda Bardwell acknowledged the disappointing results and outlined a focus on improving customer experience, price perception, availability, and fresh food offerings. She also highlighted the importance of simplifying operations and unlocking the full potential of the group's investments.