A more stable environment, albeit with lingering supply chain challenges and inflationary impacts, saw Woolworths Group sales increase by 5.7 per cent to $64.29 billion, largely due to the Australian food business.
Snapshot
- Group sales up 5.7% to $64,294m
- EBITDA up 12.7% to $5,694m
- EBIT up 15.8% to $3,111m
- EBIT excl. direct Covid costs up 3.4% to $3,116m
- NPAT up 13.7% to $1,721m
(EBITDA: Earnings Before Interest and Taxes Depreciation and Amortisation; EBIT: Earnings Before Interest and Taxes; NPAT: Net Profit After Tax; NSR: Net Sales Revenue; NPAT: Net Profit After Tax)
CEO Brad Banducci said that overall customer demand had been “remarkably stable”, the group was seeing customers becoming more careful in their spending patterns, particularly in discretionary categories.
Total sales for Australian Food increased five per cent with a four-year compound annual growth rate (CAGR) 5.8 per cent in FY23 with H2 sales increasing by 7.6 per cent (4-yr CAGR: 5.9 per cent) to $48 million.
In H1, sales growth was impacted by cycling higher growth in the prior year due to Covid-related lockdowns, with H2 sales growth reflecting elevated inflation.
EBIT increased by 19.1 per cent (4-yr CAGR: 8.4 per cent) with H2 EBIT increasing by 20.1 per cent. Banducci said excluding the material impact of direct Covid costs in FY22, EBIT increased by 9.5 per cent for the year.
Woolworths Food Retail (Stores and eCom) sales increased by 4.8 per cent (4-yr CAGR: 5.7 per cent) with H2 sales increasing by 7.4 per cent (4-yr CAGR: 5.8 per cent).
Sales growth in H2 was driven by Woolworths Supermarkets and Metro Food Stores store originated sales and eCommerce sales returning to strong growth.
Banducci said that in Woolworths Supermarkets, while industry-wide cost pressures continued to fuel inflation average price growth began to moderate in H2 with Q4 average price growth of 5.2 per cent driven by deflation in Meat and Fruit & Vegetables.
Woolworths Food Retail EBIT increased by 18.3 per cent driven by improved promotional effectiveness, category mix benefits, an improvement in productivity, and the absence of Covid costs. This helped to offset significant cost inflation primarily driven by wage increases and higher depreciation.
Metro Food Stores had a strong year with sales growth of 21.6 per cent. Increasing customer mobility, new store growth and enhancements to our existing format all contributed.
In Woolworths Food Company, own and exclusive brand sales increased by 5.4 per cent with sales momentum accelerating over the course of the year.
Banducci said there was strong growth in more affordable Pantry Essentials such as rice, pasta and drinks as well as value-added ranges such as Macro, COOK and BBQ.
“Our own and exclusive brands play a key role in providing value for our customers with inflation materially below the overall store inflation in FY23, equivalent to approximately $50 million in additional annual investment delivering increased value for our customers,” he said.
FY23 was the first year Woolies disclosed the performance of its eCommerce and other digital businesses division, WooliesX. The company had prioritised investment in the unit to meet increasing customer demand for digital, loyalty and eCommerce services.
While 1H was challenging, WooliesX had a strong second half, with sales up 5.6 per cent and Delivered-at-Place (DAP) and EBIT up 23.1 per cent on FY22.
Banducci said: “Looking ahead to F24, we expect food inflation in Australia and New Zealand to continue to moderate but will likely remain elevated in some packaged categories. We also expect the consumer environment to remain challenging with customers continuing to cut back on non-essential items.
“We remain committed to investing in our customers to deliver increased value and convenience; our teams to help them manage their own cost-of-living pressures; and in our platforms including our store network and supply chain, to create a better, safer and more sustainable future for all of our stakeholders.”
