Woolworths profits plunge as CEO admits performance ‘not good enough’

Supermarket profits are down while Big W bleeds money, leaving investors questioning if Woolworths has lost its way as chief Amanda Bardwell pledges to not let Coles win.

Woolworths CEO Amanda Bardwell says the group’s results were not good enough.

Woolworths CEO Amanda Bardwell’s pledge to make “absolutely every dollar count” to resuscitate the retailer by investing in lower prices is yet to convince the sharemarket it is the right strategy to counter the onslaught from Coles.

Brad Banducci’s successor faces many challenges: widening losses at Big W, protracted underperformance at its New Zealand supermarkets and impairments recorded within its health offshoot combined with operational and financial missteps at the core supermarkets profit engine.

The gap between Woolworths, Australia’s biggest supermarket chain, and its rival has widened to the most since Coles was reinvigorated under former owner Wesfarmers two decades ago. Coles supermarkets are on track to have stripped market share from Woolworths for the last seven quarters.

Ms Bardwell admitted that the group’s results were not good enough and that she was “not satisfied with the performance”. Investors concurred, punishing Woolworths shares with a 14.7 per cent drop to $28.51 on Wednesday.

Some analysts privately complained to The Australian the CEO was overly scripted, returning to “motherhood statements” under questioning about the big issues facing the business.

Woolworths reported a 17.1 per cent dive in normalised net profit to $1.385bn as sales rose 1.7 per cent to $69.1bn, undermined by a 10.5 per cent retreat in Australian supermarket earnings as well as a $35m loss at Big W, whose retail malaise has dragged on for almost a decade.

Investors will carry some of that pain as Woolworths declared a final dividend of 45c a share, payable on September 26, down from the 50c and special dividend of 47c paid last year.

“Big W’s performance was very disappointing,” Ms Bardwell said. “We know we have what it takes to get it right for customers.”

A trading update for the first eight weeks of fiscal 2026 was a source of fresh concern. Sales for its Australian supermarkets, excluding tobacco, rose 4 per cent. This was much weaker than Coles, which on Tuesday said sales for the first eight weeks of 2025-26 advanced 7 per cent.

Woolworths shares have fallen 19 per cent in the past 12 months against a 24 per cent gain for Coles over the same period, with the Coles market capitalisation within a few billion dollars of surpassing its once much bigger competitor.

Coles v Woolies

“Woolworths are a fair way behind Coles in terms of trading momentum, and I don’t think the market has a lot of confidence in that turnaround happening on a short-term timeframe,” Barrenjoey analyst Tom Kierath told The Australian.

“So it’s probably looking like a three to five-year turnaround. Which, frankly, I think is disappointing.”

Mr Kierath and analysts have zeroed in on Ms Bardwell’s promise to take $400m in costs from the business as not ambitious enough. Woolworths needed to become a more efficient retailer to offer “low cost” food and groceries and cement its value proposition.

“Woolworths probably needs to take a closer look at the cost base and where they are spending their money on operating costs and also on their capital expenditure, which is $2bn versus Coles at $1.2bn,” the broker said.

“All that spend and you need to get growth to offset it and Woolworths are obviously not getting that growth – it’s different trajectories at the moment.”

Ms Bardwell told The Australian the retailer had a well-thought out plan that would embrace cost discipline and lifting the supermarkets.

“What we announced today is the fact that we’re really focused on providing low prices, on operating as a very focused, simplified business, where the low-cost discipline of making every dollar count is held by everyone in the group,” Ms Bardwell said.

“We know that by enabling a lower cost, we’re able to continue to invest in driving sales and delivering the right outcomes to shareholders.

“And we’ve been very clear about our ambitions in this space. We’ve already taken action in terms of $400m worth of savings from our ‘above store’ part of our business.

“We have a large productivity program that we run across stores and our distribution centres, and we will continue to focus on lowering our cost of doing business across all aspects of our business.”

The Big W problem

Ms Bardwell, appointed CEO in late 2024, has inherited a sprawling retail empire spanning supermarkets, New Zealand grocery, general merchandise as well as food services, pet goods and health.

Its ailing Big W chain suffered from a shift in consumer spending towards lower-priced items that worsened its performance and forced Woolworths to book an impairment of $346m.

Ms Bardwell agreed that Big W’s performance was disappointing, but declined to say whether the general merchandise chain would be spruced up for an eventual sale.

Big W would get its own IT and technology platform, a possible precursor to being traded. For now, there was “more to do” in Australian supermarkets, as well as putting out fires at its struggling New Zealand network.

“After a highly disrupted first half, we have taken action to reposition the group for long-term sustainable growth,” Ms Bardwell said.

“While there is more to do and current trading remains below our ambition, we have seen some early positive signs with improving customer scores.”

Australian supermarkets recorded a 3.1 per cent lift in sales to $51.45bn but a 10.5 per cent decline in earnings to $2.75bn.

Excluding the impact of industrial action at its warehouses late last year and incremental supply chain costs, earnings would have declined by 5 per cent for fiscal 2025, and by 4.9 per cent in the second half.

But the underlying earnings decline exposed a lower gross margin, influenced by wage rises, a lower mix of in-store sales and higher depreciation and amortisation related to new stores, upgrades and supply chain investments, Woolworths said.

The W Living segment, consisting of Big W, Petstock, Woolworths MarketPlus and Healthylife, collapsed into a segment loss of $63m, widening from $29m due to Big W’s woes. Woolworths is expected to return to earnings growth in 2026, despite the tough trading conditions led by cost-of-living pressures, declining tobacco sales and rising crime rates, and it would make improving its fresh food offer a priority.

Ms Bardwell said Woolies also witnessed a rise in crime and threatening behaviour towards staff, and had to invest more in security and training. 

Increased crime

The Woolworths chief also called for the national adoption of the ACT’s successful workplace protection orders to combat theft as Woolworths confirmed to The Australian that there was disproportionate levels of crime in its Victorian stores compared to other states.

Woolworths is the fourth major retailer in a week to call out the rampant Victorian crime spree that is threatening store staff and eating into profits.

Ms Bardwell said crime rates at her stores were up 26 per cent this year with almost half of that coming from Victoria.

“The level of aggression and violence that we’re seeing in our stores is an absolute disgrace, and it’s one of the most disturbing aspects of being group CEO at Woolworths is to see the impact on our team, who are turning up every day to serve customers in their local community,” Ms Bardwell said.

“Victoria is where we are seeing the highest level of increases.

“It’s increasing across Australia, but we’re seeing an increase in levels of acts of violence in Victoria, and we’ve invested a lot over the last year to uplift and protect our team.

“We’ve done a number of different things in terms of personal alarms. In some of our stores, we have body worn cameras.”

Victorian businesses say they are suffering as retail crime reaches record heights across the state

Ms Bardwell’s dire prognosis of the escalation of crime in Victoria follows similar comments from some of the nation’s largest retailers just in the last week, with Super Retail boss Anthony Heraghty decrying “out of control” crime that is “on an industrial level” at his stores such as sports outlet Rebel. Criminal gangs were crashing into his stores, scooping up tens of thousands of dollars in high-priced goods like tennis rackets or golf balls.

Mr Heraghty said Victoria had accounted for 40 per cent of the rise in crime at his stores.

The boss of Accent Group, which is Australia’s biggest footwear retailer and owns chains such as Athlete’s Foot also singled out crime in Victoria, as did Coles boss Leah Weckert on Tuesday who highlighted Victoria as attracting the highest crime rates among her network of almost 900 stores.

Theft included organised criminals stealing meat from Coles to then sell to restaurants for a quick profit.

Retailers such as Woolworths, Super Retail and Coles are demanding action from governments and law enforcement, and Ms Bardwell has said “more needs to be done” with workplace protection orders introduced by the ACT showing early signs of success to clamp down on crime.

“It is definitely the case that in Victoria that retail crime is escalating more than what we are seeing in other states,” Ms Weckert said.

“Workplace protection orders in the ACT have clearly demonstrated that repeat criminal offenders (showed a) mark reduction once that particular law is in place. And that’s what we’d like to see right across the country.”

The ACT’s workplace protection order can be made by the ACT magistrates court to prohibit someone from engaging in personal violence towards an individual or for a workplace. It can restrict repeat offenders and criminals from visiting retail stores to engage in violent or criminal behaviour and breaching the protection order is an offence.