(Reuters) -Australia's Woolworths Group posted a 19% drop in its full-year underlying profit on Wednesday, while reporting a weak start to fiscal 2026 on the back of slower-than-expected sales growth in its biggest revenue generator, Australian Food.
Woolworths said sales at the division grew 2.1% in the first eight weeks of the business year, lower than the Visible Alpha consensus forecast of 4.1% for the first six months.
The sales growth also lagged smaller peer Coles, which reported a nearly 5%
growth on Tuesday in its supermarkets division for the first eight weeks of current fiscal.
"Our current trading performance has been below our ambition with customers continuing to cross-shop to find the best value," CEO Amanda Bardwell said in a statement.
For the year ended June 29, earnings at the Australian Food segment declined 12.9%, driven by thinner margins as price-sensitive shoppers looked for cheaper items, wage increases, and impact from a strike at its distribution centres in the first half.
That drove underlying profit at the country's top supermarket chain down 19% to A$1.39 billion ($883.73 million) for the year, in line with a Visible Alpha consensus estimate of A$1.38 billion.
The grocer, however, said it expects Australian Food segment to return to mid- to high-single-digit operating earnings growth in the current financial year, but warned that near-term headwinds from declining tobacco sales could dent the earnings by up to A$100 million.
The company, which sells more than one-third of Australian groceries, declared a final dividend of 45 Australian cents per share, lower than 57 cents apiece declared last year.
($1 = 1.5389 Australian dollars)
(Reporting by Himanshi Akhand and Rajasik Mukherjee in Bengaluru; Editing by Maju Samuel and Sherry Jacob-Phillips)
