Woolworths shares gain on earnings lift, special dividend
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More news: Shares in Woolworths were up more than 1% to $35.83 in early trading on the ASX after the supermarket giant reported a 3.4% improvement in underlying earnings and declared a special dividend of 40 cents per share.
E&P retail analyst Phillip Kimber said the retail giant delivered a slightly lower than expected FY24 result, although sales momentum in the key Supermarket business improved across 4Q and early FY25.
What they said: "Weighing these factors up, with expected consensus downgrades of 2% to 3%, we expect WOW may drift lower once the special dividend goes ex on 4 September," he said in a note.
Woolworths full-year profit slips, to pay special dividend
The news: Woolworths reported a fall in full-year profit as the supermarket giant grappled with inflationary pressures and "rapidly changing customer expectations" during the year.
The numbers: Net profit after tax lowered 0.6% year on year to $1.711 billion, falling short of consensus estimates of $1.716 billion, according to Visible Alpha data.
Australia's largest grocery retailer reported full-year revenue of $67.9 billion, up 5.6% year on year, while EBITDA grew 5.4% to $6 billion.
The group declared a special dividend of 40 cents per share, in addition to a final dividend of 57 cents, beating expectations off 77 cents.
It noted that operating capital expenditure in FY25 is expected to land between $2 billion and $2.2 billion, reflecting ongoing investment in the group's supply chain network and an increase in the number of renewals planned for the year.
The context: Woolworths said that inflation in its food businesses and BIG W "moderated significantly" in the second half of the year, as the group lowered prices and passed on lower cost prices to customers.
It noted that strong digital and eCommerce growth was a "key highlight" of the year, with total normalised eCommerce sales up 18.5% on FY23.
The group also flagged that significant items of $1.6 billion primarily relate to its previously disclosed impairment on its New Zealand supermarkets and a mark-to-market loss on Endeavour Group.
Woolworths said that it worked hard to address changing customer expectations following a drop in customer scores in the third quarter and a loss of sales momentum, which improved in the fourth quarter and into FY25.
What they said: "We have strong end-to-end productivity plans in place, which are important to delivery in FY25 given elevated wage inflation and mix pressure on our cost base," said Woolworths CEO Brad Banducci.
"We remain focused on growing our customers' shopping baskets but expect cost-of-living pressures to persist with cross-shopping and trading down continuing," he said.
The sources: ASX announcement, E&P research
