Woolworths Group has handed investors its most convincing turnaround signal in three years, reporting a full-year statutory net profit of $1.14 billion for the 52 weeks to 28 June 2026 --- up 18.1 per cent --- as its core Australian Food Business regained sales momentum and edged ahead of arch-rival Coles. Group sales rose 3.6 per cent to $71.5 billion, E-commerce jumped almost 16 per cent, and Big W clawed its way back into the black. Chief executive Amanda Bardwell used the result to argue that a strategy built on lower prices, better in-store execution and digital convenience is now bearing fruit. But a $710 million underpayments provision and a live ACCC pricing case are reminders that the recovery is far from clean.

Latest Development

Woolworths reported its FY26 result in August 2026, a day after Coles, in what has become a closely watched head-to-head between the two supermarket majors. The headline that mattered most to the market was momentum: Australian Food sales grew 4.6 per cent to $53.85 billion, outpacing Coles Supermarkets' 3.7 per cent Revenue growth to $41.5 billion. On an underlying basis --- stripping out the benefit of cycling the prior year's distribution-centre industrial action --- Woolworths food sales still rose 4.1 per cent.

Bardwell, who has led the group since September 2024, framed the numbers as validation of her reset rather than a victory lap. "The action we have taken in FY26 to deliver more value for customers, greater convenience and better execution has improved customer advocacy and sales momentum in our key Australian food business," she said, while acknowledging "household budgets remaining under pressure." Notably, Woolworths said supermarket shelf prices fell in every quarter of the year excluding tobacco, with more than 800 products enrolled in its Lower Shelf Price program at an average reduction of about 16 per cent.

The scoreboard was broadly positive across divisions. Group Earnings before interest and tax (EBIT) before significant items rose 12.7 per cent to $3.11 billion, while net profit before significant items increased 15.4 per cent to roughly $1.60 billion. Statutory NPAT of $1.14 billion --- up 18.1 per cent from about $963 million --- benefited from a lower drag from significant items than the prior period, even after a fresh $710 million pre-tax provision for the historical underpayment of salaried store team leaders following a Federal Court ruling.

Australian Food EBIT grew 8.5 per cent to $2.95 billion, or a more modest 4.8 per cent once the prior-year strike costs are excluded. New Zealand Food, long a soft spot, showed signs of stabilising, with sales of NZ$8.49 billion (up 2.5 per cent in local currency) and EBIT up 8.8 per cent to NZ$163 million. Big W was the standout swing factor, returning to profitability with $64 million in EBIT, helped by 7.5 per cent growth in own-brand sales and a 26.7 per cent surge in e-commerce transaction value.

The comparison deserves nuance, however. Coles delivered a genuinely strong result of its own --- group EBIT up 9.9 per cent and NPAT up around 13.7 per cent --- and on a tobacco-excluded basis its supermarket sales grew 5.1 per cent, arguably ahead of Woolworths on the cleanest like-for-like measure. Woolworths has reclaimed the sales-growth headline, but Coles remains a formidable, efficiently run competitor rather than a fading one.

Bull Case

The bull case rests on Operating Leverage returning to a business with unmatched scale. If Bardwell can sustain top-line momentum while the price-investment cycle matures, EBIT margins have room to recover from a depressed base. Big W's swing back to profit removes a chronic earnings drag and could become a modest tailwind. The e-commerce engine, growing at nearly 16 per cent, structurally lifts group margins over time as fixed-cost automation is spread across more orders. Cycling out the FY25 industrial-action costs flatters the year-on-year optics, but it also means the underlying store network is running more smoothly. With a 15.5 per cent Dividend increase and a fully franked payout, Woolworths is again signalling balance-sheet confidence --- a marked shift from the defensive tone of two years ago.

Risks

The risks are equally concrete. The $710 million underpayments provision underscores unresolved remediation liabilities that have repeatedly surprised the market. The ACCC's Federal Court case alleging misleading "Prices Dropped"-style discounting, which ran through the spring of 2026, remains an overhang on both reputation and potential penalties, and sits alongside consumer class actions on similar grounds. Price Investment is a double-edged sword: the same discounting that is winning back shoppers compresses gross margin, and if food-price Deflation persists, revenue growth may not translate into commensurate profit. Cost-of-doing-business Inflation --- wages, energy and supply-chain --- continues to bite. And the Ooshies-led acceleration is, by nature, a promotional sugar hit; the durability of the underlying trajectory once collectibles are cleared from shelves is unproven. New Zealand, while improved, is not yet fixed.

What Investors Should Watch Next

The critical question is whether the FY27 sales acceleration holds once the Ooshies effect washes through. Investors should track Australian Food comparable sales and, crucially, gross margin, to gauge whether Volume growth is profitable or merely bought. The trajectory of e-commerce profitability --- not just its growth rate --- will determine how much of the digital story flows to the bottom line. Resolution and quantum of the ACCC proceedings, and any further underpayment provisions, are the key downside catalysts to monitor. Big W's ability to hold its return to profit through a full year, and tangible evidence that New Zealand's recovery is structural rather than cyclical, will round out the picture. Finally, the running comparison with Coles --- particularly on a tobacco-adjusted, like-for-like basis --- will remain the market's favourite yardstick for judging whether Woolworths' turnaround is a genuine re-rating or a well-timed promotional bounce.