Woolworths Group Ltd (ASX: WOW) shares will be on watch on Wednesday after the supermarket giant released its FY 2024 results.
Let's take a look at what the company reported for the year:
Woolworths shares on watch following FY 2024 results
- Normalised sales up 3.7% to $67,922 million
- Normalised earnings before interest, tax (EBIT) up 3.4% to $3,223 million
- Net profit after tax before significant items down 3% to $1,711 million
- Reported net profit after tax down 93.3% to $108 million
- Special dividend of 40 cents per share
What happened during the year?
For the 12 months ended 30 June, Woolworths reported a 3.7% increase in normalised sales to $67,922 million. Woolworths' normalised growth has been adjusted to remove the impact of the 53rd week in FY 2024.
This top line growth was driven by a 3.7% increase in Australian Food sales, a 4.3% lift in Australian B2B sales, and a 2.4% rise in New Zealand Food sales, which offset a 3.9% decline in Big W sales.
In respect to the key Australian Food business, management advised that its sales growth slowed in the second half to 1.8% as inflation moderated despite eCom growth remaining strong.
It also advised that the New Zealand Food and Big W businesses had a challenging year and were impacted by value-conscious customers cross-shopping and trading down. Nevertheless, both businesses made good progress on their transformation plans with improved customer scores and item growth in the fourth quarter.
Due to higher costs, Woolworths' normalised profit after tax before significant items was down 3% to $1,711 million.
Things were even worse for its reported net profit after tax, which was down 93.3% to $108 million. This was driven by significant items of $1.6 billion primarily relating to the previously disclosed New Zealand Food impairment and mark-to-market loss on Endeavour Group (ASX: EDV).
However, this didn't stop the Woolworths board from rewarding its shareholders with fully franked final and special dividends. It declared a final dividend of 57 cents per share (down 1.7%) and a special dividend of 40 cents per share. This brought its full year dividends to $1.44 per share, which is up 38.5% year on year.
How does this compare to expectations?
According to a note out of Goldman Sachs, its analysts were forecasting total sales of $67,261 million, EBIT of $3,205 million, and net profit after tax of $1,725 million.
As you can see above, the supermarket leader has delivered a result slightly ahead of the broker's expectations.
Together with its special dividend, this could be good news for Woolworths shares today.
Management commentary
Woolworths' outgoing group CEO, Brad Banducci, was pleased with his final year in charge. He said:
After a strong first half, we worked hard in H2 to address rapidly changing customer expectations following the drop in our Customer scores in Q3 and a loss of sales momentum. Pleasingly, Customer scores and sales momentum improved in Q4, and this has continued into F25.
In H2, inflation in our Food businesses and BIG W moderated significantly as we lowered prices and passed on lower cost prices to customers. Average prices in Woolworths Food Retail in Q3 and Q4 were down 0.2% and 0.6% respectively on the prior year. However, cost of living remains the primary concern for our customers, and we are committed to do more to help them in the current environment by offering more value on their shopping baskets and by supporting them with new digital tools, and extra value through Everyday Rewards.
Outlook
Banducci revealed that FY 2025 has started positively. He said:
Sales momentum in F25 has continued to improve across the Group in line with improving Customer scores. In Australian Food, sales for the first 8 weeks of F25 have increased by approximately 3% driven by item growth and modest inflation with eCom continuing to be a key contributor.
We have strong end-to-end productivity plans in place, which are important to delivery in F25, given elevated wage inflation and mix pressure on our cost base. We remain focused on growing our customers' shopping baskets but expect cost-of-living pressures to persist with cross-shopping and trading down continuing.
Woolworths shares are down 6.3% since this time last year.
