Overview
Shares of Woolworths Ltd climbed sharply on Wednesday after the supermarket operator released its half-year results showing a stronger underlying profit and signs of improving shopper demand, particularly for discounted offerings.
Market reaction
At the market open, Woolworths stock rose nearly 8% to A$34.150, a move that contributed to a 0.6% lift in the ASX 200 index.
Financial results
For the six months ended January 4, Woolworths reported that underlying net profit after tax increased 16.4% to A$859 million. Group revenue for the period climbed 3.4% to A$37.1 billion. The company noted a slight improvement in gross margin to 27.4%, attributing this outcome in part to cost-reduction efforts and improvements in its supply chain.
Statutory profit and provisions
Despite the stronger underlying performance, Woolworths' statutory net profit after tax fell 49.4%. The decline was driven by a A$710 million provision the company set aside to cover potential costs associated with legal action over historical underpayment of some employees.
Dividend and early trading update
The group declared an interim dividend of 45 cents per share, up from 39 cents in the prior comparable period. Management also reported a robust start to the second half: trading in the first seven weeks of the current fiscal half showed strong activity, with sales at the core Australian food business up 5.8% in that interval.
Investor context
The stronger underlying profit, improved sales momentum at the core food unit and the higher interim dividend appear to have underpinned investor confidence at the open, even as the market absorbed the impact of the significant legal provision on reported earnings.
Promotional note contained in results release
The company release also included a promotional segment describing an AI-driven stock selection product that evaluates companies across numerous financial metrics and highlighted past winners as examples. That promotional content sits alongside the financial disclosure but does not change the reported results or the balance sheet impact of the legal provision.
Bottom line
Woolworths' half-year update presents a mixed picture: underlying earnings, sales growth and margin improvement point to operational progress and stronger consumer demand, while a large, one-off provision related to historical payroll issues materially reduced statutory profit. The company has increased its interim dividend and reported encouraging early trading in the second half.