Woolworths Group Limited (WOLWF) Q2 2025 Earnings Call Transcript

2025-02-26 08:13:12 ET

Woolworths Group Limited (WOLWF)

Q2 2025 Earnings Conference Call

February 25, 2025 06:30 PM ET

Company Participants

Amanda Bardwell - Managing Director & Chief Executive Officer

Stephen Harrison - Chief Financial Officer

Guy Brent - Managing Director, Woolworths Food Company

Paul Harker - Chief Commercial Officer, Australian Food

Conference Call Participants

Shaun Cousins - UBS

David Errington - Bank of America

Tom Kierath - Barrenjoey

Ben Gilbert - Jarden Limited

Lisa Deng - Goldman Sachs

Adrian Lemme - Citi

Michael Simotas - Jefferies

Bryan Raymond - JPMorgan

Caleb Wheatley - Macquarie

Richard Barwick - CLSA

Craig Woolford - MST Marquee

Phil Kimber - E&P Capital

Nicole Penny - Rimor Equity Research

Presentation

Operator

Thank you for standing by, and welcome to the Woolworths Group FY 2025 Half Year Earnings Announcement. All participants are in a listen-only mode. [Operator Instructions]

I would now like to hand the conference over to Amanda Bardwell, Managing Director and CEO of Woolworths Group. Please go ahead.

Amanda Bardwell

Good morning, everyone. Thank you for joining us today for Woolworths Group's half year results for the 2025 financial year. I'd like to start by acknowledging the Traditional Custodians of the land, on which we meet today, Darug Country. And I pay my respects to Elders past and present.

Joining me this morning are Stephen Harrison, our Chief Financial Officer; Von Ingram, Managing Director of W Living; Dan Hake, Managing Director of BIG W; Guy Brent, Managing Director of Woolworths Food Company; and Paul Harker, Chief Commercial Officer Australian Food. Also joining me is Spencer Sonn, Managing Director of Woolworths New Zealand; who will be stepping down in the role at the end of March to take up an exciting opportunity at Woolworths Holdings in South Africa.

Stepping into that role is Sally Copland who is also joining us today in her current capacity as Managing Director Group eComX. And finally, Annette Karantoni who was recently appointed Managing Director of Woolworths Retail also joins us in her current capacity as Chief Supply Chain Officer before officially stepping into her new role next month.

The group's H1 result reflects a challenging half impacted by industrial action in Australian Food and ongoing cost of living pressures for our customers, leading to more value-seeking behavior and cross-shopping. Our customer scores for the half reflected these challenges. However, pleasingly they've rebounded in H2 as supply levels normalized and availability improved.

Group sales for the half increased 3.7% or 2.5% excluding the impact of Petstock. Excluding the impact of industrial action underlying sales growth was solid with eCommerce growth remaining strong.

H1 group EBIT declined 14.2% on the prior year to $1.45 billion, largely driven by Australian Food due to the impact of industrial action and incremental supply chain commissioning and dual-running costs, as well as price and promotional investment and ongoing inflation in wage and other costs.

I will cover our 2025 focus areas in more detail later in the presentation, but we know we have an opportunity to further improve the shopping experience for our customers and we are taking steps to simplify our business to make it easier for our teams to have the most impact and deliver efficiencies. We also know that we have an incredibly strong business but have more to do to unlock the full potential of the group. Work is underway to assess the shape of the group portfolio, as well as ensuring that we're realizing benefits and delivering returns from our investments.

Turning to slide 4. Importantly for our customers, food inflation has continued to moderate and household spend on food continues to decline as a proportion of overall spend. Average prices in Australian Food business have now declined year-on-year for the fourth consecutive quarter with food inflation low and stable....

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