Woolworths Group (ASX: WOW) is Australia’s largest retail company, operating a diverse portfolio of retail businesses primarily in Australia and New Zealand. Its core business includes supermarkets, general merchandise, and online shopping platforms. Woolworths reported steady sales growth in its third quarter of FY2025, with Australian consumers continuing to seek value-oriented food and household items amid persistent cost-of-living pressures.
Australian Food Division Sees Resilient Growth
Woolworths’ core supermarket division in Australia delivered sales of A$13.05 billion, reflecting 3.6% year-on-year growth. The performance was largely driven by customer demand for affordable products, including the company’s growing own-brand portfolio, which offers cost-effective alternatives to traditional branded goods.
Own-brand products grew by 5.7% year-on-year, with the company reporting that customers are increasingly turning to these options, which are typically 30% cheaper than branded equivalents. The “Essentials” and “Gold” ranges showed strong performance across pantry staples, household cleaning items, and frozen food categories. Management noted that many shoppers are consciously choosing to prepare more meals at home, increasing demand for both fresh and packaged grocery items.
Additionally, promotional activity, such as weekly specials and multi-buy discounts, remained a key lever in supporting basket sizes. Items that performed particularly well included fresh produce, bakery lines, and ready-made meals, with consumer preferences leaning toward affordability and convenience.
Surge in Online and eCommerce Activity
Online sales were a standout for the quarter, rising by 15.7% year-on-year to approximately A$2.2 billion, underscoring Woolworths’ continued investment in digital platforms and delivery infrastructure. This growth was supported by robust participation in the “Direct to Boot” service, as well as increased uptake in scheduled home delivery orders.
The company leveraged key seasonal events to drive traffic to its digital channels, with Easter promotions proving especially successful. Over 70 million hot cross buns and 27.5 million units of Easter-themed chocolates were sold across physical and online platforms. Woolworths also expanded its app functionality during the period, adding features such as enhanced order tracking and personalised digital offers to attract and retain customers.
However, digital sales growth did show some moderation relative to the December quarter, suggesting that online grocery competition is intensifying and that customer preferences may be settling into post-pandemic patterns that balance in-store and digital engagement.
Big W Performance Dragged by Inventory Challenges
Woolworths’ general merchandise division, Big W, faced significant headwinds during the quarter, contributing to an expected loss of A$70 million for the second half of FY2025. The underperformance was attributed to excess inventory, particularly in clothing and seasonal items, prompting heavy markdowns to clear stock. Autumn and winter apparel ranges failed to resonate with shoppers, and shifting weather patterns added further complexity to stock planning. The business also struggled with slower foot traffic and weak discretionary spending, as households prioritised groceries and essential goods over general merchandise. Toy and home categories were more resilient, but not enough to offset weakness in fashion and leisure. Despite the disappointing results, Woolworths remains committed to reshaping Big W’s value proposition, with renewed focus on inventory accuracy, supply chain responsiveness, and clearer seasonal merchandising strategies moving into the final quarter.
Operational Disruption from Severe Weather Events
Natural disasters had a material impact during the quarter, with Queensland and Northern New South Wales hit by severe weather that disrupted store operations, damaged stock, and delayed logistics. Woolworths reported approximately A$25 million in weather-related costs, mostly tied to inventory loss and higher transport expenses.
The company took proactive steps to ensure continuity of supply during these events, redirecting freight and leveraging regional warehouses to support affected communities. Several stores experienced temporary closures but were restored to operation relatively quickly. Woolworths emphasised its commitment to community support and disaster resilience as part of its broader ESG commitments.
Liquor and New Zealand Segments Deliver Mixed Results
The Endeavour Drinks segment, now reported separately from Woolworths due to a prior demerger, was not included in the results. However, the in-store liquor operations under BWS and Dan Murphy’s continued to deliver modest growth, driven by targeted promotions and loyalty program participation. In New Zealand, Woolworths reported mixed results, with food sales holding steady but overall growth constrained by competitive pressures and fluctuating exchange rates.
