Woolworths’ shoppers are paying less for their groceries, the supermarket giant says, as it comes into more criticism over profits during a cost-of-living crisis.
This is despite the company announcing a 93.3 per cent plunge in statutory profit to $108 million for 2023-24, after its $1.7 billion operating profit was hit by $1.6 billion in writedowns against its New Zealand stores and drinks group Endeavour.
A trolley of food from Woolworths filled with 32 items a customer might typically buy cost $146.15 at June 30, one per cent less than it did a year ago, the company says.
Woolworths’ food prices fell 0.6 per cent in the June quarter and 0.2 per cent in the March quarter, the company announced on Wednesday, with meat and fruit and vegetables dipping the most.
The huge profits announced by the chain and rival Coles ($1.1 billion) sparked calls from welfare and farmer groups for them to be reined in.
Woolworths’ chief executive Brad Banducci acknowledged customers were still feeling the pinch as they grappled with rising cost-of-living pressures, which he said was changing buying habits.
But Mr Banducci said Woolworths’ research indicated that had more to do with rising mortgage and rent payments, particularly for younger customers.
“We had seen customers talking about (financial) stress but not acting on it and that certainly changed, particularly in the second half,” he said.
Customers were cutting back on non-essential items, eating out less and buying more items on sale, Mr Banducci said.
Oxfam Australia chief executive Lyn Morgain called for a “crisis profits tax” to prevent what she described as price gouging after the Woolworths’ result and profit announcement by Coles on Tuesday.
NSW Farmers criticised the “super profits” of the “supermarket duopoly”.
“Australians expect a fair go but there are businesses out there making billions while people struggle and that’s just not right,” NSW Farmers vice president Rebecca Reardon said.
A senate inquiry has recommended major supermarkets should be broken up if they are found to engage in anti-competitive behaviour. The committee examined how big chains such as Coles and Woolworths have set prices for farmers and customers during the cost-of-living crisis.
Woolworths made $67.9 billion in sales in the 53 weeks to June 30, up 3.7 per cent from the previous financial year after adjusting for the fact that it was one week shorter.
The company made just $108 million in statutory profit in 2023/24, down 93.3 per cent from the $1.7 billion the year before, after $1.6 billion in writedowns hurt its bottom line.
Woolworths wrote off $NZ1.6 billion ($A1.5 billion) against the $NZ2.3 billion in goodwill on its balance sheets from its 2005 acquisition of Foodland New Zealand.
It also recorded a $209 million loss on its stake in alcohol retailer Endeavour Group, which includes the BWS and Dan Murphy’s bottle shops, after changing how it accounts for that investment.
Excluding those impairments the supermarket giant made $1.7 billion in net profit, down 0.6 per cent from the year before on a normalised basis.
Mr Banducci said Woolworths profit accounted for just $5 of a typical basket of groceries and it was being distributed to shareholders, including many of whom own Woolworths shares in their superannuation fund.
Woolworths declared a 40 cent per share special dividend and a final dividend of 57 cents, down one cent from last year.
For the full year Woolworths will pay out $1.44 in dividends, up 38.5 per cent from 2022/23.
Despite the criticism over its profit, the company was praised on Wednesday for announcing it would stop buying beef linked to deforestation.
“No one sells more beef to Australians than Woolworths, so this commitment has enormous implications for nature and for people who want to make sustainable food choices,” Australian Conservation Foundation nature and business lead Nathaniel Pelle said.
