Food inflation adds to Woolworths woes after “below aspirations” profit

Food inflation continues to show no sign of slowing and supermarket giants such as Woolworths have begun to warn shoppers to feel the inflation pain.

The supermarket giant revealed that it is trying to return to normality after a financial year beset with challenges.

“The extremely challenging operating environment caused by supply chain disruptions, product shortages, team absenteeism and flooding led to an inconsistent customer experience and financial aspirations that was below our aspirations for the year,” said Brad Banducci, CEO of Woolworths Group.

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Amid COVID-19 outbreaks and supply chain challenges, Woolworths announced a net profit after tax of $1.51 billion for the 52 weeks leading up to June 26.

This is up 0.7 per cent compared to the previous year.

Group sales reached $60.85b, showing a 9.2 percent from FY2021 while earnings before interest and tax (EBIT) were down 2.7 per cent to $2.69b.

Sales at Woolworths’ Australian supermarkets were up 4.5 per cent to $45.5 b, with EBIT seeing a small increase of 0.3 per cent to $2.4b.

Big W sales were down 3.3 per cent to $4.4b, which Woolworths attributes to mandated store closures. EBIT went down 68.2 per cent to $55m.

Banducci said the second half was much better than the first, and the supermarket giant was entering FY23 “with a renewed sense of purpose”.

Woolworths said its strategic investments in digital, e-Commerce and loyalty programs were starting to scale.

Active customers of its shopping app grew 22 per cent to 840,000, while its Everyday rewards program users were up 4.8 per cent to 13.7 million.

MyDeal.com.au shareholders are set to vote on Woolworths taking an 80 per cent stake in the online marketplace on September 6.

Woolworths declared a fully-franked final dividend of 53 cents per share, down 3.6 per cent from its from 55 cps payout a year ago.

Excluding the Endeavour Group spinout, it will pay a total of 92cps in dividends this year, up 1 cent from FY2021.

At 11.09am AEST, Woolworths shares were down 3.4 per cent to a one and a half month low of $36.14.

With news from AAP. Content has been edited for style and length.