Woolworths under the pump

Woolworths’ performance improvement efforts are starting to pay off, but the retailer’s margins remain under pressure.

The retailer attributed this to dampened discretionary spending in both its home market of South Africa and Australia.

This has seen the first half of Woolworths’ 2026 financial year off to a rocky start, with strong turnover growth but a significant decrease in profit and earnings.

On Wednesday, 4 March 2026, Woolworths released its results for the 26 weeks ended 28 December 2025.

These results showed a 5% increase in revenue to R41.96 billion, while turnover grew by 5.2% to R41.64 billion.

This was slightly outpaced by Woolworths’ cost of sales, which rose by 6.1% to R27.35 billion.

Woolworths’ profit for the period fell by a whopping 32.5% to R1.49 billion, while its earnings per share were down 32.1% to 166.6 cents per share.

The retailer explained that its gross profit margins came under pressure over the six-month period due to a combination of factors.

This includes long-term capacity investment, targeted price investment, the stronger growth of lower-margin channels and categories, and increased promotions to clear excess inventory.

It also specifically noted that its earnings per share came from a higher base in the prior period due to the sale of its Bourke Street property.

From a segmental perspective, Woolworths’ South African Food business continued to be a standout performer, achieving turnover and concession sales growth of 7%, or 5.2% like-for-like.

This business’s revenue through Woolies Dash, the retailer’s on-demand delivery platform, grew by 23.0%, with the online channel now contributing 7.2% to South African Food sales.

The South African Fashion, Beauty and Home business saw turnover and concession sales increase by 6.2%, or 6.4% like-for-like.

This marks an improvement for a segment that had struggled over the past few years, with Woolworths having implemented various value chain initiatives to transform the business.

Similarly, Woolworths’ turnaround efforts in its Australian business, the Country Road Group, also seem to be paying off. The Country Road Group increased sales by 2.3%, or 2.5% on a comparable store basis. 

However, Woolworths noted that higher promotional activity and deliberate initiatives to clear excess inventory resulted in a 100 basis point decrease in this segment’s gross profit margin to 57.9%.

Despite this, it noted that expenses were maintained in line with last year, supported by the successful restructure of the operating model in the prior period.

Looking forward, Woolworths expects conditions in South Africa to improve, with green shoots emerging in the economy that could boost consumer spending.

However, it said inflationary pressures and a recent interest rate hike in Australia will likely further weaken consumer confidence in the country, tempering any recovery in retail spend.

Woolworths declared an interim dividend of 118 cents per share, up 10.3% from the first half of its 2025 financial year.