SYDNEY, May 4, 2026, 01:02 AEST
Woolworths Group Ltd starts the week with investors focused less on sales and more on how much profit it may give up to hold shoppers, after Australia’s biggest grocer trimmed its domestic food earnings outlook and moved to freeze prices on 300 household staples. Shares dropped as much as 9.8% after the update last week, Reuters reported.
The timing is awkward. Grocery shoppers are watching prices, fuel costs are lifting freight bills, and Woolworths is also waiting on a Federal Court ruling after the consumer regulator’s case over its “Prices Dropped” promotions wrapped up. The company has a sales story, but the margin and trust questions are now harder to dodge.
Woolworths shares last closed at A$34.15 on May 1, with the company’s own investor page showing a session high of A$34.77 and low of A$33.93. That leaves the stock still bruised after the profit-warning selloff.
The trading update itself was not weak. Woolworths said group third-quarter sales rose 4.5% to A$18.095 billion for the 13 weeks ended April 5, while Australian Food sales climbed 5.9% and group online sales rose 20.2% to A$2.7 billion. CEO Amanda Bardwell said investment in “value, fresh, convenience and execution” had improved sales momentum, but the company also said Australian Food EBIT — earnings before interest and tax, a measure of operating profit — would no longer be at the upper end of its mid-to-high single-digit growth range.
From May 1, Woolworths is holding the shelf price of 300 own-brand or exclusive products for three months, including eggs, bread, chicken, sausages, pasta and nappies. Woolworths said it would absorb agreed supplier cost increases on those items, with Bardwell saying the Middle East conflict had brought “a new wave of uncertainty” and that “a little certainty can go a long way.” Woolworths Group
The legal overhang is separate, but it hits the same nerve: prices. The Australian Competition and Consumer Commission alleges Woolworths misled shoppers on 266 products between September 2021 and May 2023 by raising prices for short periods and then promoting lower prices that were still higher than, or the same as, earlier regular prices. The ACCC has brought a similar case against Coles, involving 245 products.
Woolworths has rejected the allegations. In closing arguments, its counsel Robert Yezerski SC said shoppers were not misled and that the higher prices were held long enough to count as previous regular prices. Justice Michael O’Bryan also questioned parts of the ACCC case, saying the promotion did not appear “nefarious or inherently misleading,” though judgment remains pending. ABC News
Consumer expert Joel Gibson at Zyft told the Guardian the case was unlikely to “slow them down much,” while Australian Shareholders’ Association chief executive Rachel Waterhouse said “most people are waiting for an outcome.” Prof Nicole Gillespie, a University of Melbourne trust expert, said the case had already cast a “shadow of suspicion” over promotional tickets for many consumers. The Guardian
The competitive read is mixed. Coles, Woolworths’ main listed rival, reported total group sales revenue of A$10.703 billion for its third quarter, up 3.1%, with supermarket revenue up 4.0% and online supermarket sales up 24.8%. Coles also flagged more supplier cost requests and higher fuel, freight and packaging costs, while CEO Leah Weckert said “value and availability” would matter for customers in the months ahead.
But the risk cuts both ways. If fuel and supplier cost pressure eases, Woolworths’ price freeze could help protect volumes without doing too much damage to margins. If costs keep rising, or if the court finds against the supermarkets, the company faces a tougher mix of price investment, possible penalties and more damage to consumer trust. University of Melbourne law professor Jeannie Paterson wrote that the Woolworths and Coles rulings will help set the rules for “truth in advertising” across Australian retail. Find an Expert
For Woolworths, the next test is simple and not simple at all: keep baskets full, keep suppliers close, and show investors that a sharper value pitch will not eat the profit it is meant to protect.
