Highlights

  • Woolworths Group reported Q3 FY26 group sales growth of 4.5% to A$18.1 billion, supported by Australian Food, eCommerce and Big W performance.
  • H1 FY26 underlying net profit after tax increased 16.4% to A$859 million, while statutory NPAT declined due to significant items.
  • Group eCommerce sales continued expanding, rising 20.2% in Q3 FY26 and 14.6% in H1 FY26.
  • Softer June-quarter inflation reduced expectations of further monetary tightening, creating a more supportive environment for defensive consumer businesses.

Woolworths Group Limited (ASX: WOW) enters the second half of 2026 with improving operational momentum, supported by resilient grocery demand, expanding digital capabilities and a more favourable inflation backdrop.

The supermarket operator has benefited from its defensive business model as consumers continue prioritising essential spending. However, expectations remain elevated, with upcoming FY26 results expected to provide further insight into margins, earnings quality and the sustainability of recent improvements.

Latest operating update

Woolworths’ most recent trading update came through its third-quarter FY26 sales report, released on 30 April 2026 for the 13 weeks ended 5 April 2026.

Group sales increased 4.5% to A$18,095 million. Australian Food remained the primary contributor, with sales rising 5.9% to A$13,828 million.

Group eCommerce sales increased 20.2% to A$2.7 billion, reflecting continued consumer adoption of online grocery services and investment in digital fulfilment capabilities.

Big W sales increased 3.9% to A$1,032 million, while New Zealand Food sales rose 1.4% to NZ$2,148 million.

Management highlighted improvements across value, fresh products, convenience and execution. However, the company noted increased uncertainty affecting customers and suppliers, while Australian Food EBIT growth expectations were adjusted from the upper end of previous guidance.

H1 FY26 financial performance

The company’s first-half results for the 27 weeks ended 4 January 2026 provided further insight into earnings trends.

Group sales increased 3.4% to A$37,135 million. Australian Food EBIT rose 9.9% to A$1,510 million, supported by improved operational efficiency and productivity initiatives.

Group eCommerce sales climbed 14.6% to A$5,358 million, with online penetration reaching 15.5%.

Big W delivered a significant improvement, with EBIT increasing 122.5% to A$70 million. New Zealand Food EBIT also increased 22.4% to NZ$100 million.

Underlying net profit after tax before significant items increased 16.4% to A$859 million, while the interim dividend increased 15.4% to 45 cents per share, fully franked.

However, statutory NPAT declined 49.4% to A$374 million, impacted by a A$710 million provision related to salaried team member remediation costs. This highlighted the difference between underlying operational performance and reported earnings.

Inflation and interest-rate outlook

The broader economic environment remains a key factor for Woolworths.

June-quarter inflation data showed consumer prices increasing 3.8% annually, down from the previous level of 4.0%. The trimmed mean inflation measure remained at 3.6%, while food and non-alcoholic beverage inflation was recorded at 3.3%.

The moderation in inflation reduced expectations of additional monetary tightening and improved sentiment toward defensive consumer businesses.

For Woolworths, lower inflation can support household confidence and reduce pressure on consumers. However, slower grocery inflation may also reduce some of the revenue benefits previously generated from higher prices.

Key business growth drivers

Woolworths’ growth outlook is supported by several operational initiatives.

The company’s eCommerce expansion remains a major contributor, with online sales continuing to grow at a faster pace than traditional grocery operations. Investment in automated distribution infrastructure is expected to support efficiency improvements and customer service capabilities.

The Australian Food division continues to benefit from its scale, customer loyalty and focus on value positioning.

Big W’s recovery has also become an important contributor, with improved profitability showing progress in the discount retail segment.

Risks and challenges

Despite improving operational performance, Woolworths faces several risks.

Regulatory scrutiny remains elevated across the supermarket sector, with authorities continuing to focus on pricing transparency, supplier relationships and competition.

The company’s A$710 million wage-remediation provision highlights the potential impact of compliance issues and operational challenges.

Cost pressures, competitive intensity, changing consumer behaviour and elevated market expectations remain important considerations.

Additionally, a valuation that reflects strong business quality leaves limited room for weaker-than-expected results or margin pressure.

Upcoming catalysts and key dates

The next major focus point is Woolworths’ FY26 full-year results, scheduled for release on 26 August 2026.

The results will provide further clarity on Australian Food performance, earnings growth, dividend decisions and the impact of operational initiatives.

The Reserve Bank of Australia’s upcoming policy decisions will also influence the broader consumer environment, particularly expectations around future interest-rate conditions.

The bottom line

Woolworths enters its FY26 reporting period with a combination of resilient sales growth, expanding digital operations and improving business execution.

The company continues to benefit from its defensive supermarket position, while Big W recovery and eCommerce expansion provide additional support.

However, regulatory attention, cost pressures and elevated expectations remain important challenges. The upcoming FY26 results will be critical in determining whether operational momentum can translate into sustainable earnings improvement.