By Shivangi Lahiri
Feb 25 (Reuters) - Shares of Woolworths climbed to a 17-month high on Wednesday after the Australian grocer beat forecasts for interim
underlying profit and said its market share was stabilising as it accelerated its expansion into lower-priced value ranges.
Targeted discounts helped Woolworths, the country's largest grocer, tap into value-led demand after losing ground for much of fiscal 2025 to smaller rival Coles , reinforcing its appeal as a first-stop option for budget-conscious households amid cautious consumer spending.
Sales in Woolworths' biggest money-making segment, Australian Food, rose 3.6% to A$27.63 billion ($19.50 billion) in the half year, as it expanded its Lower Shelf Price range and rolled out shopping incentives, including customer rewards, to lure more shoppers.
That boosted the grocer's underlying net profit after tax by 16% to A$859 million for the 27-week period ended January 4, beating the Visible Alpha consensus estimate of A$813.5 million.
Woolworths also delivered a strong second-half fiscal 2026 trading update for its Australian Food division, reporting sales growth of 5.8% in the first seven weeks, well ahead of the Visible Alpha consensus forecast of a 3.4% growth.
It also expects reported operating earnings for its Australian Food division in fiscal 2026 to land at the upper end of the mid- to high-single-digit growth range outlined in August.
Josh Gilbert, market analyst at eToro, noted that promotions are still pressuring gross margins, making the EBIT lift mostly cost-driven for now, while investors look to see the same convert into stronger margins as competition cools.
"With Coles reporting on Friday, the market will get a much clearer picture of how the grocery wars are actually playing out between this duopoly," he added.
Shares of the firm were up 10.6% at A$34.87, as of 0007 GMT, hitting their highest level since September 20, 2024 and eyeing their best day since mid-March 2020.
Shares of Coles edged 0.2% lower to A$21.82.
Woolworths declared an interim dividend of 45 Australian cents per share, compared with 39 Australian cents a year earlier.
($1 = 1.4166 Australian dollars)
(Reporting by Shivangi Lahiri and Rajasik Mukherjee in Bengaluru; Editing by Tasim Zahid, Jonathan Ananda and Sherry Jacob-Phillips)
