All eyes will be on Woolworths Group Ltd (ASX: WOW) shares next week when the supermarket giant releases its half year results.
Ahead of the eagerly anticipated release, let's take a look at what the market is expecting from the retailer when it hands in its report card on Wednesday 26 February.
Woolworths half year results preview
According to a note out of Goldman Sachs, its analysts are expecting Woolworths to deliver a result below consensus estimates for the six months.
This is due to the impacts of the supply chain disruption that Woolworths faced late last year.
As a reminder, industrial action was taken across distribution centres (DCs) in Victoria and New South Wales for 17 days across November and December before an agreement was reached.
Woolworths estimates that Australian Food sales were negatively impacted by approximately $140 million in total. Whereas the estimated direct one-off negative impact on Australian Food EBIT was approximately $50 million to $60 million at the time the agreement was announced.
In light of this, Goldman Sachs believes that Woolworths will post a 4% increase in half year sales but a sizeable 18.3% decline in first half EBIT compared to the prior corresponding period. The latter is 9% lower than consensus estimates. It said:
We look for +4.0%/-18.3% YoY sales/EBIT growth in 1H25. While this is ~9% below VA Consensus on EBIT, which we attribute to the one-off impact of DC disruption still to be fully factored in. We estimate this impact to be ~A$100mn. Excluding this gives EBIT growth of -12% YoY. From 3Q25, we see comps easing and forecast ~3% LFL sales (normalized for 53rd week last year).
Should you buy Woolworths shares?
Despite expecting a poor result from Woolworths next week, Goldman Sachs remains very positive on the investment opportunity here. It adds:
With channel shift into online continuing, our recent e-Comm deep dive still suggests that WOW has the best omni-channel and digital retail capabilities amongst Australian retailers. The stock is trading at FY26e P/E of ~20x, approximately -1std below its historical average, we expect recovery in market share and cost discipline and scaling of retail media to drive recovery in AU Food EBIT margin, with trough earnings in NZ/W Living also support earnings recovery from 2H25 onwards.
In light of this, the broker has put a buy rating and $36.10 price target on Woolworths' shares.
Based on its current share price of $30.50, this implies potential upside of 18.3% for investors over the next 12 months.
In addition, Goldman Sachs is forecasting a fully franked 92 cents per share dividend in FY 2025. This equates to a 3% dividend yield, which boosts the total potential return on offer with its shares beyond 21%.
