Woolworths New Zealand topped $8 billion in food sales during its 2024 financial year but its profits slumped 56%, which the grocery giant attributes to a competitive trading environment and cost of living pressures reducing customer spending.
Woolworths NZ is the local arm of Woolworths Australia and was previously known as Countdown in NZ until a name change back to Woolworths was announced in 2023.
The Woolworths group reported its June-year financial results on Wednesday with earnings before interest and taxes (EBIT) for Woolworths NZ coming to $108 million — down 56.5% from a $249 million EBIT in the 2023 June-year.
EBIT measures a company’s profitability before accounting for interest and taxes.
Woolworths New Zealand Managing Director Spencer Sonn described it as a “challenging year” for the grocer and its overall financial performance reflected “the very competitive trading environment” Woolworths NZ is operating in as well as material wage costs.
“Lower sales, combined with our investments in lower prices for our customers and material wage costs to support our team, all had an impact on earnings in F24. Encouragingly, we saw improved trading in Q4 with items returning to growth,” Sonn said.
“We are seeing signs of inflation moderating which will be a relief to our customers, with many fresh products cheaper now than they were this time last year, and we’ll continue to monitor our costs while delivering meaningful value to Kiwi shoppers.”
The cost of groceries have risen alongside cost-of-living pressures and Stats NZ reported in August that food prices increased 0.6% in the year to July 2024.
NZ food sales up 3.2%
Total New Zealand food sales rose 3.2% to $8.16 billion while Woolworths NZ’s gross margin fell 58 basis points to 22.5% in the full-year period.
The company said in its group results on the Australian share market that the decline in gross margin was primarily driven by investment in value and the reset of pricing mechanics in an extremely competitive market.
“While higher freight costs and the Everyday Rewards program launch also contributed to the reduction in gross margin, this was partially offset by an improvement in stock loss and cycling a collectible program in the prior year,” the company said.
Ecommerce sales for Woolworths NZ rose 5% to $1.07 billion. The company said sales momentum had improved in the second half of the 2024 financial year.
“As part of Woolworths New Zealand’s transformation, investment in convenient same day delivery propositions including Express pick up and delivery and MILKRUN is supporting strong growth with MILKRUN now available in 57 stores and Direct to Boot in 43 stores” the company said.
Looking ahead, outgoing Group Chief Executive Brad Banducci said in the group’s results that NZ food sales had increased by approximately 1.5% in the first eight weeks of the 2025 financial year.
“For full-year 2025, we expect EBIT to be above full-year 2024 with stronger growth in the second-half, but it will take time for the business to return to its full earnings potential,” he said.
In Australia, Woolworths is the country’s biggest supermarket chain and owns over a third of the grocery market.
In NZ, Woolworths makes up half of NZ’s supermarket duopoly which it shares with Foodstuffs South Island (FSSI) and Foodstuffs North Island (FSNI).
The two Foodstuffs co-ops have also reported their 2024 financial results, with FSSI revealing a net loss after tax of $11.5 million and FSNI a net loss after tax of $3.2 million. Both co-ops reported record revenue.
Looking ahead, outgoing Group Chief Executive Brad Banducci said in the group’s results that NZ food sales had increased by approximately 1.5% in the first 8 eight weeks of the 2025 financial year.
“For F25, we expect [NZ] EBIT to be above F24 with stronger growth in H2, but it will take time for the business to return to its full earnings potential,” he said.
Banducci is leaving Woolworths in September. He quit his role earlier this year following a controversial interview walkout around supermarket pricing.
The Woolworths group’s EBIT for the June-2024 year rose 3.4% to A$3.2 billion (NZ$3.4 billion) which was up from A$3.1 billion (NZ$3.3 billion) in the previous financial period.
The group announced a special dividend of A$489 million or 40 Australian cents per share from the sale of a 5% stake in retail firm Endeavour Group. The dividend will release A$209 million of franking credits.
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