Woolworths has reported a significant 16.4% rise in profit, helped by expanding its margins in its key supermarket business.
In its half-year earnings report released on Wednesday, Woolworths recorded an increase in underlying net profit to $859m over the six months to 4 January, up from $739m in the prior corresponding period.
Australia’s largest supermarket chain significantly expanded its profit margins during a period of reigniting inflation, with groceries and other household costs rising strongly again in the second half of last year.
The company’s results come ahead of a planned legal case brought by the consumer regulator against Woolworths.
The Australian Competition and Consumer Commission (ACCC) is alleging Woolworths and Coles misled shoppers by offering “illusory” discounts on hundreds of common products.
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The case against Coles, which is being heard first, began last week in the Victorian federal court.
Woolworths, which operates the Big W department store chain in addition to its supermarkets in Australia and New Zealand, will be closely watching the proceedings before its own, very similar case brought by the ACCC begins.
The legal proceedings are putting a spotlight on the supermarket industry’s pricing practices at the same time as Coles and Woolworths attempt to mend reputational damage they suffered during the ACCC’s inquiry into the sector.
Over the past six months, Woolworths also set aside $485m to remediate underpaid staff members following a federal court ruling last September.
At the same time, sales at Woolworths supermarkets increased by 3.6% to $27.6bn during the six-month period, while its profit margins generated in the grocery business expanded from 5.1% to 5.5%.
In its report to the Australian Stock Exchange on Wednesday, Woolworths said its revenue increase was due to a reduction in operating costs, and this was partly because it no longer had to deal with the financial hit from recent industrial action.
In the six months to January 2025, Woolworths’ net profit fell by almost 21% to just under $739m.
Last year, Woolworths estimated the impact to sales from industrial action at its warehouses, undertaken by workers during pay negotiations, was about $240m.
At the time, Woolworths also announced a $400m cost-saving program which it said would result in some redundancies.
Investors had been expecting the Woolworths to perform better over the past six months.
Woolworths shares, which had been climbing in value since early January, surged by more than 11% to $35 by Wednesday afternoon after the company released its half-year results.
Coles and Woolworths are generally more profitable than almost all of their international peers, including Tesco, Carrefour, Sainsbury’s, Albertsons, Kroger Co and Ahold Delhaize, according to ACCC analysis.
The Woolworths chief executive officer, Amanda Bardwell, told investors on Wednesday that price remained the top priority for Australian customers.
“After signs of tentative improvement in customer sentiment towards the end of last year, persistent inflation and the prospects of interest rate rises have seen customers again prioritising ways to save,” she said.
Bardwell said the company had added more than 350 new products to its lower shelf price program, taking the number of products in the range to more than 800 products.
Woolworths said its supermarket prices decreased by 0.5% on average, excluding tobacco, compared to the prior year, which it spruiked as the eighth consecutive quarter of year-on-year price declines.
However, the Australian Bureau of Statistics, which uses supermarket scanner data to calculate the rate of inflation, has said groceries were a major factor in the recent surge in the cost of living.
Spending on food and non-alcoholic beverages contributed 3.4% to annual inflation in the 12 months to December, according to the ABS, second only to housing.
The consumer price index, the government’s official inflation metric, rose 3.8% overall in the 12 months to December 2025, up from a 3.4% increase in the 12 months to November 2025.
