SYDNEY, May 2, 2026, 07:07 AEST
- Woolworths warned its Australian Food EBIT, a profit measure before interest and tax, would grow in the mid- to high-single digits but no longer at the top end of that range.
- The shares fell as much as 9.8% on Thursday, their worst intraday drop since August 2025, even as quarterly sales beat market expectations.
- From May 1, the grocer is freezing prices on 300 own-brand and exclusive staples for three months.
Woolworths Group Ltd’s profit warning turned a stronger-than-expected sales quarter into a selloff, after the Australian grocer said higher fuel costs and price support for shoppers would curb earnings growth in its main food business. Reuters reported the shares fell as much as 9.8% to A$33.63 on Thursday, despite group sales coming in ahead of Visible Alpha estimates.
The issue now is not whether shoppers are still buying groceries. They are. The harder question is how much profit Woolworths can keep when fuel, freight and supplier costs rise while customers remain focused on cheaper baskets and discounts.
A Woolworths filing showed group sales rose 4.5% to A$18.095 billion in the 13 weeks to April 5. Australian Food sales rose 5.9% to A$13.828 billion, helped by stores, e-commerce and some pantry stocking in March.
The company said reported fiscal 2026 Australian Food EBIT growth was still expected in the mid- to high-single-digit range, but no longer at the upper end. It cited direct fuel exposure in the fourth quarter and investment to help customers manage budgets, including the new price freeze.
“We are seeing early signs” the Middle East conflict is affecting customers and staff, Chief Executive Amanda Bardwell said. Woolworths said higher fuel costs and second-round effects were likely to have a larger inflation impact as the year progresses.
The price freeze covers 300 Woolworths-branded or exclusive products, including eggs, bread, chicken, sausages, pasta and nappies. The company said it would absorb agreed supplier cost increases on those items so shelf prices do not rise during the three-month period.
There was strength in the numbers too. Group e-commerce sales rose 20.2% to A$2.7 billion, and active Everyday Rewards members reached 10.7 million. Australian Food average prices excluding tobacco fell 1.0% from a year earlier, a sign Woolworths was already spending on price before the freeze began.
Kylie Purcell, senior markets analyst at Stake, told 9News that “shoppers are becoming more deliberate,” buying more items per basket and leaning on loyalty programs. She also said the price freeze was “unlikely to completely ease public annoyance.” 9News
The margin pressure is not only a Woolworths issue. Coles Group, its closest listed supermarket peer, reported May 1 that supermarket sales rose 4.0% to A$9.781 billion for its third quarter, with e-commerce sales up 24.8%. Coles also said supplier price increase requests and its own fuel, freight and packaging costs had risen in recent weeks.
But the plan carries risk. If fuel and commodity costs stay high, Woolworths may have to choose between absorbing more cost, raising prices on items outside the freeze, or seeing earnings squeezed. The company said it was too early to predict the full fiscal 2027 impact of the Middle East conflict and would update investors at full-year results in August.
With the ASX shut for the weekend, Woolworths’ own site showed the stock at A$34.15 at 4:50 p.m. AEST on May 1. That leaves investors weighing a simple split: sales momentum is solid, but the cost of defending value is now moving faster into the profit line.
