The Woolworths Group Ltd (ASX: WOW) share price is up 11% after revealing its HY26 result and a strong trading update.
Woolworths has a number of different businesses including supermarkets, business to business (B2B) sales, Big W, Petstock, retail media and more.
Woolworths HY26 result
Here are some of the highlights from the report for the first six months of FY26:
- Sales grew 3.4% to $37.1 billion
- Underlying EBITDA (EBITDA) rises 8.5% to $3.2 billion
- Underlying EBIT rose 14.4% to $1.66 billion
- Underlying net profit after tax rose 16.4% to $859 million
- Statutory net profit after tax (NPAT) sank 49.4% to $374 million
- Interim dividend per share rose 15.4% to $0.45
What happened?
There was a mixed performance across its different divisions, but it came with a strong level of profit growth.
Australian food sales grew 3.6% to $27.6 billion and EBIT rose 9.9% to $1.5 billion. Within this, the business said momentum is building through investment in value, fresh and convenience with improving momentum in the second quarter.
The Woolworths average price of products saw a decline of 0.5%. Woolworths said e-commerce sales grew by 15.3% to $4.3 billion. Its cost of doing business (CODB) decreased by 24 basis points (0.24%), reflecting productivity initiatives and ‘above-store’ cost savings.
Australian B2B sales grew 4.9% to $3.1 billion and EBIT climbed 14.6% to $89 million. This division was driven by strong sales growth at the PFD business as well as export meat sales growth. Cost control helped the EBIT growth.
New Zealand food sales increased 2.8% to NZ$4.4 billion and EBIT grew 22.4% to NZ$100 million. E-commerce sales rose by 13.9%, while average prices increased by 0.8%.
W Living (including BIG W) sales rose 2.7% to $3.1 billion and EBIT soared 185.6% to $96 million. BIG W sales rose 1.8% to $2.65 billion while Petstock sales jumped 13.1%. An improved clothing range helped support BIG W’s EBIT to soar 122.5% to $70 million, while Petstock’s EBIT climbed 49.6% with strong comparable sales growth, a boost to the gross profit margin and cost management. MyDeal and other losses improved 67.2% to $6 million thanks to the closure of the MyDeal website.
The significant item in the financials was a $710 million salaried team member remediation impact, which related to historical underpayment of award-covered store team leaders for wages, interest, superannuation and payroll tax.
Trading update
Woolworths said the first seven weeks of the second half of FY26 has been strong, with Australian food sales growth of 5.8% (or 7.2% excluding tobacco) thanks to “strong store item growth and e-commerce” sales.
Some of that growth rate reflects the benefit of cycling residual industrial action impacts from a year ago.
Its Australian food division’s EBIT growth is expected to be at the “upper end” of the mid-to-high single digit guidance range it provided last year.
New Zealand food sales have only increased by 1.7% in a challenging environment.
BIG W remains on track to be EBIT and cashflow positive in FY26. Sales are flat on the prior year with higher growth in full-priced sales offset by somewhat lower clearance sales.
Final thoughts on the Woolworths share price
Clearly, this update is positive for Woolworths and the business is growing at a solid pace again. It’ll be interesting to see whether it’s taking growth from Coles Group Ltd (ASX: COL) or whether they are both performing.
Most importantly, Woolworths’ profit is rising and this is ultimately what investors value a business on. Time will tell whether margins can continue rising without impacting operations/customer demand.
It has already risen after the result, so I wouldn’t call it cheap based on this result and I’d be happy to look at other ASX dividend shares. But, if I were a shareholder, I’d be pleased to see these numbers, including the larger dividend.
