Woolworths’ Australian business swings to a huge loss

Woolworths’ Australian operations swung to a loss in its 2025 financial year, as impairments in the country offset the strong performance from its South African business.

Woolworths is one of South Africa’s largest retailers, but also has operations in Australia and New Zealand, where it trades as the Country Road Group.

On Wednesday, 3 September, the retailer released its results for the 52 weeks ended 29 June 2025, which revealed a disappointing performance.

Woolworths’ revenue increased by a modest 3.76% to R80.24 billion, while its operating profit before net finance costs decreased by 12.21% to R4.38 billion.

However, the company recognised a R8.94 billion impairment on its investment in Country Road. The retailer also recognised a R584 million impairment on its investment in Osiris Holdings, which arose mainly in Australia on the disposal of its David Jones business.

The retailer’s Country Road Group made a loss before tax of R1.89 billion, significantly more than the R533 million loss recorded in 2024.

This division’s loss offset a strong contribution from its South African food business, which delivered an above-market performance in the 2025 financial year.

Woolworths Food saw its turnover and concession sales grow by 11.0% for the year, with sector-leading growth of 7.7% on a comparable-store basis. 

Excluding the Absolute Pets acquisition, Food sales grew by 9.2%, highlighting continued strong momentum in the core business. 

The retailer said positive underlying volume growth was driven by increased footfall and larger basket sizes, supported by a strong innovation pipeline and enhanced customer experience.

Woolies Dash, the group’s on-demand platform, achieved sales growth of 41.6% for the period. 

The company’s overall online channels continued their rapid expansion, with online Food sales growing 32.9% and contributing 6.6% to total Food sales.

The retailer’s Fashion, Beauty, and Home business also performed well over the period, with turnover and concession sales growth of 4.7% and comparable store sales up 5.1%.

However, increased promotional activity, additional supply chain costs associated with the transformation of the Distribution Centre, and higher inventory levels resulted in this segment’s gross profit margin declining by 120 basis points to 47.3%.

Overall, Woolworths’ profit for the year declined to R2.46 billion, down from R2.6 billion the prior year.

Australia pain

In its Australian operations, Country Road completed a significant restructure during the year to reconfigure its operating model and reset its structural economics as a standalone business.

Woolworths said this restructuring was undertaken in an accelerated timeframe and within a particularly unconducive macro backdrop.

Because of this, sales declined 5.4% for the year and 6.8% on a comparable store basis.

This segment’s gross profit margin declined by 390 basis points to 56.4% due to the high promotional activity dominating the sector and the weaker Australian dollar inflating input costs.

“This year’s results reflect the continued strength and resilience of our premium Food business, but also the transformation undertaken across our apparel businesses,” said CEO Roy Bagattini. 

“Following significant investment over the past few years, we have completed the heavy lifting, which now positions each of our businesses to deliver to their true and full potential through our loved and trusted brands.”

Looking ahead, Woolworths expects its operating environments to remain challenging, with subdued business and consumer confidence in both geographies and discretionary spend likely to remain constrained for the foreseeable future.

“Global uncertainty regarding the potential impact of higher US tariffs also presents additional headwinds to the macroeconomic outlook,” the retailer said.

“Notwithstanding these factors, the group is well positioned to benefit from its clear strategies, growing customer base, strengthened brands and foundational capabilities, and the investments made in new avenues of growth.”

Woolworths declared a final dividend of 81 cents per share, taking its total dividend for the year to 188 cents per share.