SYDNEY, May 2, 2026, 07:07 AEST
- Woolworths has flagged that its Australian Food EBIT—profit before interest and tax—will rise by a mid- to high-single-digit percentage, but won’t reach the upper end of that band anymore.
- The shares tumbled as much as 9.8% on Thursday—the steepest intraday slide since August 2025—even though quarterly sales topped market forecasts.
- Starting May 1, the grocer will lock in prices on 300 staple products from its own-brand and exclusive ranges, holding them steady through a three-month freeze.
Woolworths Group Ltd managed to top sales forecasts last quarter, but that wasn’t enough to stop a sharp drop in shares. The Australian grocer flagged that rising fuel expenses and increased price cuts for customers will drag on earnings in its core food segment. Shares tumbled as much as 9.8% to A$33.63 on Thursday, Reuters noted, even with group sales beating Visible Alpha estimates.
No one’s questioning if people are still picking up groceries—they are. The real puzzle for Woolworths is how much margin it can protect as fuel, freight, and supplier costs climb, especially with shoppers sticking to discounts and budget baskets.
Woolworths reported group sales of A$18.095 billion for the 13 weeks ended April 5, up 4.5%. Australian Food sales climbed 5.9%, hitting A$13.828 billion, with growth attributed to stores, e-commerce, and a bump in pantry stocking during March.
The company maintained its outlook for Australian Food EBIT growth in fiscal 2026, sticking with mid- to high-single-digit gains, though it’s no longer targeting the upper end of that band. Direct fuel exposure in the fourth quarter and spending on budget support for customers—such as the new price freeze—were cited as reasons.
Chief Executive Amanda Bardwell said “We are seeing early signs” the Middle East conflict is having an effect on both customers and staff. Woolworths flagged that higher fuel expenses and follow-on impacts could drive greater inflation pressure as the year goes on.
Woolworths is locking in prices on 300 of its own label or exclusive items—think eggs, bread, chicken, sausages, pasta, nappies—for the next three months. The retailer said it plans to take on any supplier price hikes for these products, so shoppers won’t see shelf prices change over that stretch.
The numbers told their own story. Group e-commerce sales jumped 20.2% to A$2.7 billion. Active Everyday Rewards membership climbed to 10.7 million. Average Australian Food prices, excluding tobacco, slipped 1.0% from last year—a sign Woolworths had already been cutting prices before rolling out the freeze.
Kylie Purcell, a senior markets analyst at Stake, told 9News shoppers are “becoming more deliberate,” loading up their baskets and tapping into loyalty perks. But she pointed out the price freeze move probably won’t “completely ease public annoyance.” 9News
Margin squeeze isn’t limited to Woolworths. Coles Group, Woolworths’ main listed supermarket rival, said on May 1 that third-quarter supermarket revenue climbed 4.0% to A$9.781 billion, with e-commerce jumping 24.8%. The company flagged growing pressure from supplier price hike requests, plus higher costs for fuel, freight and packaging in recent weeks.
Still, there’s risk here. Should fuel and commodity prices remain elevated, Woolworths faces a tough call: either swallow higher costs, bump up prices on products not included in the freeze, or take a hit to earnings. The company isn’t ready to forecast the exact fallout from the Middle East conflict for fiscal 2027 just yet, saying it’ll have more to share for investors with August’s full-year results.
With the ASX closed for the weekend, Woolworths’ own site listed shares at A$34.15 as of 4:50 p.m. AEST on May 1. Investors face a straight-up tradeoff: sales remain strong, but higher costs to protect value are starting to bite into profit.
