Woolworths CEO Amanda Bardwell admits sales ‘below our aspirations’ as first quarter misses target

Woolworths chief executive Amanda Bardwell has conceded first quarter sales for Australia’s biggest supermarket chain have come in “below our aspirations”.

The grocer, which also owns Big W, on Wednesday reported group-wide sales of $18.5 billion — up 2.7 per cent on the same period last financial year.

Australian food sales were up 2.1 per cent while Woolworths food sales, excluding tobacco, rose 3.8 per cent.

Ms Bardwell said the benefits of changes Woolworths was making to improve value, convenience and availability for shoppers were starting to take effect but “there remains more to do”.

“It will take some time for the full benefits of our strategic actions to be realised but we remain confident the steps we are taking will lead to meaningful improvements for our customers and our shareholders,” she said.

She said momentum was building in the second quarter, with Woolworths food sales, excluding tobacco, since October 6 so far up 5 per cent.

That was supported by easing pressure at the tills, with average prices, excluding tobacco, compared to the previous year now down for seven consecutive quarters, with a 0.3 per cent fall in the first quarter. Most pantry items were in “modest” deflation but meat prices remained high.

“In September, we increased customer engagement through Rewards offers, ecommerce investment and weekly promotions to drive traffic and sales with item growth showing a modest improvement in trend during the quarter,” Ms Bardwell said.

“We also added over 100 products to our Lower Shelf Price program, bringing the total to over 750 products with low double-digit unit growth across the program.”

The market update showed sales of fresh foods such as chilled items, meat and fruit were solid in the 14 weeks to October 5 but pet, home essentials and baby items continued to underperform. Own and exclusive brand sales grew 2.8 per cent.

Tobacco sales halved but online sales soared 12.9 per cent.

Woolworths also reported a 39 per cent jump in the take-up of its “on demand” option — where orders can be delivered or picked up in under two hours — as customers seek greater convenience.

Big W continued to lag, with sales up just one per cent compared to the same period last year to $1.14b.

Clothing sales were up thanks to improved availability and a solid start to the summer season and aided by warm weather while new product launches and category expansions lifted toy sales. Home growth was supported by improved winter sell-through, driven by volume growth in new on-trend homeware ranges at low prices.

“Looking ahead, we are cautiously optimistic about our key trading quarter and we have strong plans in place for our customers for the festive season including a refreshed seasonal range,” Ms Bardwell said.

“Woolworths food retail sales in Q2 to date have increased by 3.2 per cent (5 per cent excluding tobacco) as we continue our focus on rebuilding momentum.”

The quarterly results were announced a day before the company’s annual general meeting, where the supermarket is expected to be pressed about difficulties in the core food and Big W businesses.

In August, the retailer announced profits had fallen due to weak performance out of its supermarket and Big W brands.

The nation’s largest retailer posted a 1.7 per cent lift in full-year revenue to $69.08b, but normalised profits were down 17.1 per cent to $1.39b.

Underlying profits were down 19 per cent on the back of slower-than-expected sales through its food division.

Its supermarket division showed that Australians spent $51.45b, up 3.1 per cent, but profits also dropped double digits.

Big W lost $35m last year compared with earnings before interest and taxes of $14m.

Ms Bardwell said in August the results were disappointing.

“In F26 we expect to return to profit growth following a disappointing F25,” she said.

“The company will continue to rebuild customer trust through providing value and simplify the way we work and become a more focused, lower-cost retailer with a differentiated food offer at our core.”