Woolworths shares on watch after CEO exit and $781 million loss

Brad Banducci retires as New Zealand business devastates the supermarket's bottom line.

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Woolworths Group Ltd (ASX: WOW) shares will be keenly monitored on Wednesday after the supermarket giant revealed its half-year results and a shock exit for its chief Brad Banducci.

What did the company report?

  • Revenue up 4.4% to $34.64 billion
  • Profit before significant items up 2.5% to $929 million
  • Loss after significant items up 192.4% to $781 million
  • Interim dividend 47 cents per share

The significant items were dominated by a $1.5 billion non-cash write-down of the Woolworths New Zealand business, which was forewarned last month.

The major news accompanying the result was that long-serving chief executive and managing director Banducci would retire on 1 September. He exits after 8.5 years in the role, to be replaced by the current boss of WooliesX, Amanda Bardwell.

What else happened in the first half?

A boardroom fight at the owner of Dan Murphy's, Endeavour Group Ltd (ASX: EDV), has meant that Woolworths decided recently that it no longer has "significant influence" over that business with its 9.1% legacy stake.

That and the poor performance of the New Zealand business has meant the share price has spiralled 4% down over the past six months before trade on Wednesday.

What did management say?

The group's first half F24 result was mixed and reflects solid results from Australian Food and Australian B2B somewhat offset by the impacts of a very challenging trading environment on New
Zealand and BIG W. Encouragingly, customer scores have held up with Group VOC NPS of 50, down one point on the prior year. Customer care and shelf availability were the highlights. However, our customers' concerns about the cost of living continues to impact our value for money scores, which remains our key focus for H2.

It has been a privilege to be a member of the Woolies team and one I have never taken for granted. We have a wonderfully talented and passionate team at Woolworths Group, as personified in Amanda Bardwell, and I look forward to working with Amanda and our team over the next few months as we set ourselves up for the next chapter.

Brad Banducci, chief executive and managing director

What's next for Woolworths?

Customers continue to be cost-conscious, so the supermarket giant is treading lightly with margins and prices.

"Sales in the first seven weeks of H2 F24 have continued to moderate reflecting lower inflation and a more cautious consumer," said Banducci.

"Delivering value for customers remains our number one priority for H2."

In the Australian grocery business, sales increased by about 1.5% for the first seven weeks of the second half.

"While underlying cost inflation (including wages) in H2 is expected to remain high, we have a strong productivity pipeline in place for H2 (and into F25). However, EBIT growth in H2 is expected to be below H1."

Woolworths share price snapshot

Before market open on Wednesday, Woolworths shares were down 2.3% for the past year. However, long-term investors have done okay with a 47.8% gain over the past half-decade.

Motley Fool contributor Tony Yoo 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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