April 30 (Reuters) - Woolworths surpassed third-quarter sales estimates on Thursday, but warned that domestic food segment earnings growth could no longer reach the upper end of the range, citing fuel price pressures and customer retention investments.
Australia's biggest grocery chain said the Middle East conflict has created significant uncertainty for customers and suppliers, compounding already acute cost-of-living pressures.
"While the impact on the Group to date has been limited, higher fuel
costs and secondary effects are likely to have an increasing inflationary impact as we move through the calendar year."
Woolworths expects fiscal 2026 operating earnings growth in its Australian Food unit to be in the mid- to high-single-digit range, albeit no longer at the upper end of the market view.
"We are seeing early signs that the conflict in the Middle East is impacting our customers and team, many of whom were already experiencing significant cost-of-living pressures," CEO Amanda Bardwell said.
Woolworths will freeze shelf prices for three months on 300 household staples from May 1 as conflict-driven cost pressures on Australian suppliers affect prices across supermarkets.
The company will absorb any agreed-upon supplier cost increases to maintain the price freeze, with weekly specials and promotions remaining in effect.
For the 13-week period ended April 5, Woolworths reported a roughly 6% in its Australian Food business sales, driven by pantry stocking in March and the impact of cycling industrial action in the prior year.
Woolworths posted group sales of A$18.10 billion ($12.89 billion) for the reported period, ahead of Visible Alpha consensus of A$17.98 billion and above A$17.31 billion reported a year earlier.
($1 = 1.4043 Australian dollars)
(Reporting by Sneha Kumar and Roushni Nair in Bengaluru; Editing by Tasim Zahid and Sherry Jacob-Phillips)
