Woolworths share price on watch as sales leap 9% to $61 billion

What happened in FY 2022 for Woolworths?

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Key points

  • Woolworths shares will be in focus today following the release of the company's FY 2022 results
  • The company registered a 9.2% increase in group sales, and a slight lift in NPAT by 0.7%
  • The board declared a final dividend of 53 cents per share

The Woolworths Group Ltd (ASX: WOW) share price will be on watch this morning.

This comes after the company released its full-year results for the 2022 financial year.

At yesterday's market close, shares in the retail giant finished 1.35% lower to $37.40.

Woolworths share price in focus following resilient financial performance

Woolworths has delivered its FY 2022 results for the 12 months ended 26 June 2022.

Here are some of the key financial highlights:

  • Group sales up 9.2% to $60,849 million
  • Earnings before interest and tax (EBIT) down 2.7% to $2,690 million
  • Net profit after tax (NPAT) up 0.7% to $1,514 million
  • Earnings per share (EPS) up 3.6% to 124 cents per share
  • Final dividend of 53 cents per share, fully franked, bringing the full-year dividend to 92 cents per share, up 1.1%.

What happened in FY 2022?

Throughout FY 2022, Woolworths faced a number of difficult operating conditions across all facets of its businesses. This was related to COVID-19 supply chain disruptions, product shortages, team absenteeism, and flooding events along Australia's east coast.

Despite the challenges, the group's financial performance improved materially in the second half, led by its Australian food business. Total sales in this segment grew 4.5% to $45,461 million over the prior corresponding period (pcp).

Higher food inflation contributed to sales growth on the back of industry‐wide cost price increases. As COVID-19 restrictions eased, customers have been gradually returning to their normal spending habits.

The Australian B2B division recorded a bumper result with sales surging 224% to $3,963 million. This was underpinned by the acquisition of PFD as well as services revenue from Endeavour Group Ltd (ASX: EDV) following its demerger.

New Zealand food sales improved by 5.8% to NZD $7.6 billion as nationwide lockdowns in mid-August led to more in-home consumption.

Lastly, BIG W's sales declined 3.3% to $4.4 billion due to an extended period of store closures in the first half and the impact of Omicron in the third quarter. Although, sales recovered strongly in the fourth quarter supported by Easter, Mother's Day, and Toy Mania events.

What did management say?

Woolworths Group CEO Brad Banducci had this to say about the latest results:

The extremely challenging operating environment caused by supply chain disruptions, product shortages, team absenteeism and flooding led to an inconsistent customer experience and a financial performance that was below our aspirations for the year.

However, I am proud of how our team continued to show great care for our customers and each other and ongoing resilience to deliver a strong Christmas, and materially improved trading momentum in H2.

Importantly, we were also able to continue to progress our strategic and sustainability agendas and I am confident that, as we enter F23 with a renewed sense of purpose, we will be able to navigate ongoing uncertainties and challenges to deliver for all of our stakeholders.

What's the outlook for FY 2023?

Looking ahead, Woolworths noted that FY 2023 remains uncertain as it continues to navigate through COVID-19.

The Australian food business has experienced a slight decline of 0.5% in total sales in the first eight weeks of FY 2023. Despite team absenteeism and supply chain disruptions improving, they continue to be above pre-COVID levels.

Furthermore, the New Zealand food division has also felt supply chain disruptions and team absenteeism. Total sales in the first eight weeks have declined 1% compared to the prior year.

On a positive note, BIG W total sales have been strong in the first eight weeks, increasing by just under 30%. This is being driven by increased customer mobility, strong execution, as well as cycling a sales decline of 15% in the prior year.

Banducci provided some insight for the new financial year, saying:

… We expect the trading environment to remain volatile and challenging due to endemic COVID disruptions, ongoing supply chain challenges, higher costs across our business and cost-of-living pressures for our customers. However, we are increasingly more agile and purposeful in responding to these challenges and are focused on improving our underlying operating performance across all aspects of our value chain after three years of disruption.

Woolworths share price snapshot

The Woolworths share price has dipped 2% in 2022, but is down 8% when looking over the past 12 months.

For context, the S&P/ASX 200 Consumer Staples (ASX: XSJ) sector is down 6% since this time last year.

Woolworths commands a market capitalisation of approximately $45.4 billion.

Motley Fool contributor Aaron Teboneras 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 no position in any of the stocks mentioned. 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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