The Woolworths share price outperformed the ASX 200 in FY22. Here’s why

The 12 months ended 30 June 2022 brought many ups and downs for this ASX 200 supermarket operator.

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Key points

  • Despite some major peaks and troughs, the Woolworths share price traded relatively flat over the course of financial year 2022, slipping just 0.6% to $35.60 
  • Meanwhile, the ASX 200 slumped around 10% 
  • The supermarket giant's resilience came amid notable acquisition news and despite major COVID-19 disruptions 

The Woolworths Group Ltd (ASX: WOW) share price was arguably one of the S&P/ASX 200 Index (ASX: XJO)’s top value shares in financial year 2022 (FY22).

And what a year it was. The supermarket giant battled through COVID-19 outbreaks, supply chain issues, and numerous acquisition challenges.

As of the final close of FY22, the Woolworths share price was $35.60, 0.6% lower than it was at the end of FY21. For context, the ASX 200 fell around 10% last financial year.

So, what went on with the ASX 200 staple over the period? Let’s take a look.

The Woolworths share price outperformed in FY22

Let’s cast ourselves back to the start of FY21. Sydney was in the first few weeks of its multi-month COVID-19 lockdown, Australia’s vaccine rollout was underway, and Woolworths had only just split from Endeavour Group Ltd (ASX: EDV).

Here are all the major happenings that have impacted the Woolworths share price since then.

Woolworths’ earnings

Woolworths’ FY21 earnings, released in August 2021, detailed a strong year’s performance.

The company’s sales increased 5.7% to around $67.3 billion in FY21 while its earnings before interest, and tax rose 13.7% to around $3.7 billion. Finally, its after tax profits lifted 22.9% to $1.9 billion in FY21.

It also announced a $2 billion off-market buyback.

Sadly, the first half of FY22 wasn’t so favourable for the supermarket giant.

Its after-tax profit slipped 6.5% from that of the prior consecutive period, mostly due to costs associated with the spread of COVID-19.

COVID-19 impacts take toll on Woolworths share price

The Woolworths share price dived 7.6% in mid-December when the company updated the market on the expected impact of COVID-19 outbreaks.

Woolworths Group CEO Brad Banducci commented on the struggles facing the company during the first half, saying:

The first half of FY22 has been one of the most challenging halves we have experienced in recent memory due to the far-reaching impacts of the COVID Delta strain and its impact on our end-to-end stock flow and operating rhythm.

The supermarket later thanked customers for their patience as the ongoing COVID-19-related challenges saw some shelves empty in early January.

One acquisition, two acquisition

And finally, Woolworths was on the hunt for acquisitions in FY22.  

It entered a multi-horse race for formerly-ASX listed Australian Pharmaceutical Industries in early December. It ultimately gave up the chase, allowing ASX 200 conglomerate Wesfarmers Ltd (ASX: WES) to snap up API in March.

But that wasn’t the last of it. The supermarket operator put forward a $1.05 per share bid for an 80.2% stake in online marketplace Ltd (ASX: MYD) in May.

The deal would see MyDeal taken off the ASX, with the remaining 19.8% stake held by its management.

The bid represented a 62.8% premium on MyDeal’s previous close and hasn’t yet been finalised.

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Wesfarmers Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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