Woolworths flags $1.7b hit to first-half earnings

The news: Supermarket giant Woolworths has warned of significant headwinds in its New Zealand operations and outlined two major writedowns against its first-half earnings.

The numbers: The retailer said food sales at its New Zealand stores continued to be challenging, which would result in first-half earnings in the segment coming in 42% lower than a year ago. Following a review of the NZ Food segment’s forecasts for the next three years, it will record a non-cash impairment of NZD1.6 billion ($1.5 billion) as a significant item in the FY24 half-year results. It will also write down another $209 million after changing the accounting recognition for its remaining 9.1% stake in drinks giant Endeavor Group.

The context: Woolworths said first-half earnings in the NZ Food segment and at Big W would be materially below the same period last year. However, financial performance at the Australian Food segment as well as the PFD Food Services business remained solid. As a result, the supermarket giant expects group half-year earnings before significant items to be in the range of $1.68 billion to $1.699 billion, representing growth of 2.8%-3.8%. The company will detail half year results on 21 February.