Woolworths financial year 2025 results
Woolworths Group (ASX: WOW), half of the Duopoly supermarket of Australia, has just released its results for the entire year for the financial year 2025. The figures painted a picture of significant headwind and a planned recovery. The results were largely in accordance with the expectations of the consensus, but the company paved a softer than soothing prospects, which activated a sharp sale in the shares.
At the time of writing, Woolworths shares probably made an important dent in super funds, which yesterday fell to around $ 29 from more than $ 33. Investors are mainly concerned about falling profit, margin pressure and challenges in important segments, despite the company that emphasizes power bags in digital operations and international.
At group level, sales with a modest 1.7 percent to $ 69.1 billion. Growth rises to 3.6 percent when it is normalized to explain the 52 -week period compared to the 53 weeks of the previous year. Underlying income before interest and tax took a remarkable hit, 14.6 percent fell to $ 2.75 billion, or 12.6 percent on a normalized basis. The result reflected wider cost pressure and operational disruptions.
The underlying net profit followed the example, 19.1 percent dropped to $ 1.38 billion, with the profit reflected by this fall per share – fall by 19.1 percent to $ 1.135 per share. On a legal basis, net profit actually rose $ 855 million to $ 963 million.
Wow’s EBIT -Marge closed by 70 basic points to four percent, while the net debt to EBITDA climbed to 2.8 times, which indicates a slight tension on the balance. Dividends were also cut, with the final payment of 45 cents per share of 21.1 percent of the ordinary dividend of the entire year to 84 cents, a reduction of 21 percent that underlined the careful approach to the company for capital returns in the midst of the profit fire.
Segmental
The Core Australian Food Division, which remains the engine of the company and an important engine of the Woolworths stock price, saw sales rise by 1.2 percent to $ 51.4 billion, or 3.1 percent on a normalized basis. However, the profit for interest and tax in this unit reduced 12.6 percent to $ 2.75 billion, which adapted to a decrease of 10.5 percent on a like-for-like decrease.
The recession was attributed to a confluence of factors, including persistent cost inflation, investments in competitive prices to win customer confidence, increased equity losses (small theft in Victoria?), A shift to self-brand products with lower margins and wage increases.
Industrial action only in the first half cost $ 95 million, while the expenditure for Supply Chain and a reduced mix of sales in the store with a higher margin added further pressure.
Encouragingly, the sale of e-commerce within this segment increased 17.4 percent on a normalized basis, pushed online penetration to a record of 15.1 percent and improved the scores of customer satisfaction in the fourth quarter thanks to a better performance of the retail trade and fewer disruptions.
The Australian B2B -arm, which includes activities such as PFD Food Services (the largest wholesale distributor of Australia), offered a steady performance, in which the turnover increased 2.7 percent to $ 5.7 billion and profit for interest and tax, by 12.4 percent to $ 137 million. The growth was fed by mar giverbeteringen at PFD and robust expansion with double digits in the external supply chain-business, which offer a counterbalance for weaknesses elsewhere.
In New -Zeeland -Foedel, sales grew by 1.5 percent to NZ $ 8.3 billion in local currency terms, supported by the constant rebranding for Woolworths and transformation initiatives that resonated with shoppers and the volume growth of the unit of the unit of drift. The income here came back sharply, an increase of 38.3 percent to NZ $ 150 million, which marks a sharp recovery compared to the steep fall in the previous year, with the sale of e-commerce also 17.1 percent.
The W Living Division, including discount retailer Big W, Petstock and MarketPlus and Healthylife, emerged as a big pain. Turnover climbed by 8 percent to $ 5.6 billion, helped by affordable offers and seasonal rooms that lowered the average selling prices, but the segment waved to a loss of $ 63 million and deteriorated compared to the $ 29 million shortage of the previous year.
Big W Alone registered a loss of $ 35 million, exacerbated by operational challenges, while Petstock contributed $ 44 million in income during the first full year under the ownership of Woolworths, although this was tempered by mandatory disinvestments of shops and veterinary clinics to meet the regulating requirements.
The digital and media arm, Wooliesx, was a bright spot, with a profit for interest and tax that rises 23.8 percent to $ 428 million on sales growth from 16 percent to $ 9.62 billion. This momentum was driven by the expansion of daily rewards to 10.4 million active members, increased app engagement and growth in additional services such as Insurance and Mobile, which now serve more than 1.1 million customers.
Prospect
The management of Woolworths, led by CEO Amanda Bardwell, framed 2026 as “transitions” with the aim of rebuilding the momentum. In the first eight weeks of FY26, the sale of Australian food increased by 2.1 percent or four percent excluding tobacco, although this remains.
The sale of food in New Zealand increased by 2.6 percent, affected by temporary rival promotions, while the large W sales remained flat.
The company anticipates a return to the reported profit growth in the middle of the High-Single figure in Australian food, although few consensus springses around 11.8 percent, with a headwind of an accelerated tobacco turnover that decreases the profit by $ 80 million to $ 100 million and $ 60 million.
Grote W is expected to return to profitability, and new Zeeland food is expected to see continuous improvement.
In the medium term, Woolworths strives for sustainable profit growth with a high-single figure, supported by a cost-saving program of $ 400 million aimed at efficiency above stores by December 2025, investments in automation and supply chain transformation, and a renewed market of the lower plank prices.
Of course, mid-to-high growth means one figure that it could take several years to return to 2024 profit levels.
Bardwell openly recognized the dissatisfaction with the performance of FY25, in particular the losses at Big W, but expressed trust in the Turnaround strategy, including the renewal of the leadership team, the simplification of activities and prioritizing the foundations of the retail and availability.
Although the results met expectations, the modest guidelines and early trade did not inspire softness and contributed to the share price reaction. Woolworths shares now act with a discount on historical multiples, and if the CEO Woolworths can position for stronger growth, especially because the inflation of food and e-commerce scales further moderate, the current levels can mark a low point. In a competitive landscape that includes Aldi and Coles, the performance will be everything. Wow has traded potential income between 15 and 28 times. We appreciate the share at $ 32.33 per share, given the reduction of cost inflation and the growth of E -Commerce.
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The Montgomery Fund and the Australian Eagle Fund own shares in Woolworths. This article was founded on 27 August with the information we have today and can change our opinion. It is not formal advice or professional investment advice. If you want to trade Woolworths, you must obtain financial advice.
Roger Montgomery is the founder and chairman of Montgomery Investment Management. Roger has more than three decades of experience in fund management and related activities, including stock analysis, stock and derivative strategy, trade and effects. Prior to the establishment of Montgomery, Roger positions in Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.
He is also the author of the best -selling investment guide for the stock market, value. Aabel-Hoe to appreciate the best shares and buy them for less than they are worth.
Roger regularly appears on television and radio, and in the press, including ABC Radio and TV, the Australian and Ausbiz. View upcoming media performances.
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