Woolworths shares fall on lower earnings forecast
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More news: Woolworths shares fell at market open on the ASX after the supermarket giant revised down its first-half earnings forecasts.
Woolworths shares were down 4.9% to $31.20 by 11am AEDT.
E&P Capital analyst Phillip Kimber said that while Woolworths' Q1 sales beat estimates in its core Australian food division, the revised guidance fell below market expectations.
Australian food EBIT is now expected to be within a range of $1.48 billion to $1.53 billion, compared to consensus forecasts of $1.62 billion. This would result in a year-on-year decline of between 4% and 7%, Kimber said.
E&P expects consensus earnings-per-share downgrades of between 5% and 7% following the result.
Woolworths reduces first-half earnings forecast
The news: Supermarket major Woolworths lowered its earnings forecasts for the first half of the 2025 financial year, warning that cost-of-living pressures were expected to impact trading for the remainder of the year.
The numbers: Woolworths said it expects first-half earnings before interest and taxes to be within a range of $1.48 billion and $1.53 billion, compared to $1.595 billion in the first half of FY24.
Group sales totalled $18 billion in the first quarter, up 4.5% compared to the previous corresponding period. Australian food sales increased 3.8% year on year to $13.6 billion while eCommerce sales grew 21.1% to $2.4 billion.
The context: Woolworths CEO Amanda Bardwell said the company is pleased with trading momentum but expects the environment for FY25 to “remain challenging”.
She noted that while promotional activity in Woolworths’ Australian food segment contributed to improved sales momentum, it also led to a lower margin sales mix.
Elsewhere, Woolworths ‘voice of customer’ (VOC) net promoter score (NPS) declined one point following the announcement of legal proceedings by the competition regulator last month. VOC NPS is based on a sample of Woolworths customers which rate the group’s businesses on a range of criteria.
What they said: "Looking ahead, we expect customers to remain extremely value-conscious with cost-of-living pressures to continue for the remainder of FY25," Bardwell said.
"Wage cost growth will remain elevated in FY25; however, our productivity program remains on track to help mitigate some of these increases together with an ongoing focus on managing the impact of a growing eCommerce mix."
The source: ASX announcement
