Key Highlights

  • Group sales were $19,353 million in the first quarter of FY27, up 4.7 per cent.
  • Australian Food comparable sales rose 6.1 per cent, with transactions up 3.0 per cent.
  • Average prices excluding tobacco fell 0.7 per cent, the eleventh consecutive quarterly decline.
  • Everyday Rewards had 10.9 million members at the end of the quarter.

Woolworths Group Ltd (ASX:WOW) is rebuilding momentum in its core supermarket business, as shown by its FY26 result and first-quarter FY27 update. How is Woolworths Group rebuilding momentum in its core supermarket business, and why does it matter? The answer, based on its FY26 result and first-quarter FY27 trading update, is a combination of faster online growth, falling average shelf prices and more encouraging own-brand sales, which together lifted Australian Food comparable sales by 6.1% in the 14 weeks to 4 October 2026. That matters because Australian Food is the profit engine of the group, and the company is trying to show that its recovery is broad-based rather than reliant on one-off promotions.

The central development: a more encouraging start to FY27

Woolworths reported group sales of $19,353 million for the first quarter of FY27, up 4.7% on the same period a year earlier, or 5.7% in constant currency. Australian Food sales rose 6.9% to $14,841 million, with comparable sales up 6.1%. The company said comparable items grew 4.0% and transactions 3.0%, which indicates the gain came from both more shoppers and fuller baskets, not just inflation.

One detail stands out. Average prices excluding tobacco fell 0.7%, the eleventh consecutive quarterly decline. Volume-led growth at falling prices is a different proposition to growth driven by price rises, and it is consistent with management's stated aim of offering low prices alongside range and convenience. Management also said a Disney Ooshies collectable campaign boosted early-quarter sales, and that October trading was broadly in line with the post-Ooshies pace of the quarter. Investors should therefore treat the headline growth rate as partly promotional rather than a clean run-rate.

What the FY26 result showed

For the full year to June 2026, Woolworths reported sales of $71.54 billion, up 3.6%. Earnings before interest and tax, before significant items, rose 12.7% to $3.11 billion, and net profit after tax before significant items rose 15.4% to $1.60 billion. A fully franked final Dividend of 52 cents per share was declared, 15.6% higher than a year earlier.

Australian Food EBIT rose 8.5% on sales growth of 4.6%, with the second half more encouraging than the first as store execution and customer offers improved. BIG W returned to profit after a loss in the prior year, helped by better stock management and more encouraging own-brand ranges. Petstock EBIT climbed 33.5%. New Zealand Food was softer, with sales up 2.5% in local currency but softer in Australian dollars because of currency movements and store changes.

Business and Revenue drivers

Three drivers are to watch. The first is eCommerce. Group eCommerce sales reached $10.6 billion in FY26, up 15.9%, and in the first quarter of FY27 reached $3.1 billion, up 16.0%. In Australian Food, the eComX measure grew 20.2% to $2,665 million, lifting online penetration to 18.2% from 16.2%. Nearly half of delivery orders, 48%, were fulfilled within two hours, and the company is expanding faster formats, with 703 stores offering Direct to Boot Now and 776 offering Delivery Now.

The second is loyalty and data. Everyday Rewards had 10.9 million members at the end of the quarter, up 3.7%, which supports personalised offers and the retail media Business built around them. The third is own and exclusive brands, which grew 8.5% in the quarter. These typically carry better margins than branded goods, and the company is also preparing more than 500 budget-conscious festive products for Christmas.

Fresh sales grew 8.1% and long-life 5.9%. The Australian B2B division grew 4.4% to $1,634 million, with PFD up 3.9% and PC+ delivering double-digit revenue growth, although the food service side faces some cost-of-living pressure. New Key Accounts customers are due to join B2B in the second quarter.

Sector and competitive position

Woolworths operates in a concentrated grocery market in which Coles is the main rival, with Aldi, Costco and independent grocers also competing, and in which price perception has been politically sensitive. A decline in average prices helps with that perception, but it also limits how much Margin can be recovered through pricing. The company's emphasis on convenience, with fast delivery and a large loyalty base, is designed to defend share in a market where competitors are investing in similar capabilities.

Outside the main grocery business, conditions are more mixed. BIG W sales fell 0.9% to $1,127 million with comparable sales down 1.3%, although its online gross transaction value grew 7.7%. W Living, which groups BIG W with Petstock and other businesses, was down 0.7% to $1,380 million. Petstock sales rose 6.1% to $253 million, with comparable sales up 4.3%. New Zealand Food sales were NZ$2,251 million, up 2.9% in local currency, but down 6.4% in Australian dollars, and growth moderated once the Ooshies campaign ended.

Risks and developments to monitor

The risks are fairly clear. Promotional campaigns can pull forward sales, so growth may slow as Ooshies comparisons fade. Falling average prices put pressure on margins unless volumes, own-brand mix and cost savings compensate. Management expects the challenging economy and household budget pressure to continue, and said New Zealand and BIG W are expected to remain subdued.

On the positive side, the Moorebank Supply chain precinct is expected to bring efficiency gains as it ramps up, and the company has said the first eight weeks of FY27 showed continued momentum in Australian Food.

The next scheduled event is an Investor Day on Wednesday 18 November 2026, at 9:00 am AEDT, available by webcast.