Woolworths Group’s first half results have been impacted by the ongoing Covid-19 pandemic, with sales growth moderating compared to the same time last year, while operating costs boomed.
Adverse weather in New South Wales was also partially to blame for the business’ slower second quarter, which led to sales growth of 3 per cent for the half compared to 10.6 per cent last year.
And, following it’s “challenging” first quarter, the business is putting its hopes squarely on the holiday season to improve its performance into the second half of the financial year.
“We have a good in-stock position and positive trading momentum, and our team is working hard to ensure that our customers have access to all they need to make this a special Christmas,” said Woolworths Group chief executive Brad Banducci.
“However… Covid has had a significant impact on costs, even more so than last year due to the combination of both direct Covid-related costs together with the indirect impacts from disruption caused by Covid.
“This includes the significant disruptions we have seen across the end-to-end supply chain, and the material inefficiency this causes in our stores, distribution centres and transportation.”
According to the business, its Australian Food operating costs hit approximately $70 million during the half, but this number is likely to fall in the second half – assuming Covid restrictions are not tightened further.
Australian Food earnings before interest and tax are expected to land between $1.19 million and $1.22 million, compared to $1.3 million for the same period last year. And while New Zealand Food’s sales were ‘strong’, benefiting from extended lockdowns and high inflation, Woolies didn’t specify any specific figures.
Big W saw a massive dip in earnings throughout the half, with EBIT falling to between $20 million to $30 million, compared to the $133 million earned in the same period last year, caused by store closures throughout the first quarter.
Despite the difficult half, however, Woolworths is committed to thanking its front-line teams across Australia and New Zealand with a $40 million thank you bonus spread across its workforce.