Woolworths profits down as cost of living hits shoppers

Neve Brissenden |

Profits at supermarket behemoth Woolworths have taken a hit.
Profits at supermarket behemoth Woolworths have taken a hit.

Woolworths’ profits have fallen as the cost-of-living crisis continues to bite shoppers searching for better deals.

The supermarket giant released a market update on Wednesday, confirming that October sales had taken a hit.

Sales in the food division increased 4.5 per cent to $18 billion during the first quarter of the 2024-25 financial year but earnings could now be as low as $1.48 billion in the December half, down from $1.6 billion a year earlier.

Woolworths signage at a supermarket in Melbourne
Woolworths expects prices to continue to fall as shoppers remain cash-strapped. (Joel Carrett/AAP PHOTOS)

“Customers remain highly value-conscious and continue to purchase more items on special or trade down to lower priced items, including own brand,” Woolworths chief executive Amanda Bardwell said.

“These competitive factors, together with strong e-commerce growth, is leading to a lower-margin sales mix, which has impacted earnings.”

Ms Bardwell said the organisation expects prices to continue to fall as shoppers remain cash-strapped.

Woolworths has been under scrutiny recently as investigations continue into whether the company misled customers with fake discount schemes.

Rival supermarket Coles has also been accused of using the discount tactic.

Signs for companies Target, Kmart, Coles, Woolworths and Aldi
Customers are shopping around at other supermarkets for the best deals. (Darren England/AAP PHOTOS)

Ms Bardwell refrained from commenting on the ongoing legal action but said the organisation does not take customers’ support for granted.

“We know that out customers have many choices about where to shop.

“We will also continue to engage in good faith with the government and regulatory inquiries and investigations,” she said.

Both supermarkets deny any wrongdoing and have begun to fight the proceedings in the Federal Court.

Coles and Woolworths make up 67 per cent of the supermarket sector and it took the next largest chain, Aldi, 20 years to get to nine per cent of the market share.

An Australian Competition and Consumer Commission report in September – released two days after it launched the legal action against Coles and Woolworths – highlighted customer concerns on soaring prices at the checkout, a lack of competition and a loss of trust about specials or discount schemes.

A survey by the Australia Institute earlier in October found most people believe supermarkets are responsible for a great deal or some of the blame for financial pressures.

Woolworths’ share price tumbled 5.8 per cent early on Wednesday.

AAP