Woolworths posts a whopping $1.62b profit despite the ongoing cost-of-living crisis
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It's no secret that technological advancements have made the world more convenient. However, they have also led to an increase in the cost of certain things.
At the SDC, we appreciate the luxuries that technology brings. For instance, the convenience of ordering groceries online and having them delivered within days is truly remarkable.
And it seems that we are not the only ones who recognise the benefits of these technological advancements.
Recent news from the country's largest supermarket chain, Woolworths, indicates that they have effectively leveraged the resources provided by the 21st century. Their net profits have surged to a staggering $1.62 billion for the entire financial year.
Their convenience-oriented approach has yielded significant results. Woolworths' financial report demonstrates that their profits have increased at a higher rate than before the pandemic—an achievement many retailers can only aspire to amidst the ongoing economic crisis.
The nearly 20 per cent rise in earnings for their Australian supermarkets caught the attention of their customers and the nation's policymakers. In fact, this has even led to a series of inquiries concerning living costs.
As it turns out, the sector's preferred gauge of profitability, known as operating margins, has spiked at Woolworths from 5.3 per cent to 6 per cent.
This 6 per cent mark is the highest margin for the groceries division recorded at Woolworths in over a decade.
It's so high, in fact, that Woolworths now enjoys double the margins that some of their international counterparts earn in more competitive markets.
Woolworths CEO Brad Banducci states that this is not solely a result of increased sales, explaining that 'it is not a direct outcome of food sales within supermarkets'.
This announcement from Woolworths comes after Coles reported an impressive $1.09 billion net profit for the 12 months ending in June 2023, up 4.8 per cent compared to the previous financial year.
The nation's second-largest supermarket also generated an impressive $36.7 billion in supermarket sales revenue, a 6.1 per cent increase year-on-year.
Joseph Mitchell, the Secretary of the Australian Council of Trade Unions (ACTU), was shaken, remarking: 'It appears the average Aussie is feeling the pinch in their wallet while big businesses are boosting their bottom line.'
And he is not alone in this sentiment. Former regulatory authorities and economists have also attributed the expansion in profit margins to a lack of competition in Australia, where Woolworths and Coles control two-thirds of the market.
Furthermore, these studies suggest that the period from 2022 to 2023 could potentially witness increased stress on households, with the majority of anticipated interest rate rises occurring during this time.
Michael Brennan, the outgoing Chair of the Productivity Commission, further emphasised this concern. During a National Press Club event speech, he explained: 'One of the things that has been an inhibitor to competition in supermarkets has been planning at the state level…'
'Coles and Woolies are pretty well embedded in the planning systems, pretty good at identifying sites, potentially pretty good even at freezing out rivals.'
One notable instance is the sudden withdrawal of German retailer Kaufland from entering the Australian market after significant investment. This serves as further evidence of how challenging it is for new supermarkets to establish themselves in the crowded market.
Members, there's no doubt that it's a difficult situation for the everyday Aussie shopper. If you want to get the best value for your money, you have to stay well-informed to ensure you're not missing out on any specials or value deals.
What are your thoughts? Do you think supermarkets should pass these profits to customers as savings? Let us know what you think in the comments section below!
At the SDC, we appreciate the luxuries that technology brings. For instance, the convenience of ordering groceries online and having them delivered within days is truly remarkable.
And it seems that we are not the only ones who recognise the benefits of these technological advancements.
Recent news from the country's largest supermarket chain, Woolworths, indicates that they have effectively leveraged the resources provided by the 21st century. Their net profits have surged to a staggering $1.62 billion for the entire financial year.
Their convenience-oriented approach has yielded significant results. Woolworths' financial report demonstrates that their profits have increased at a higher rate than before the pandemic—an achievement many retailers can only aspire to amidst the ongoing economic crisis.
Woolworths has recorded a dramatic lift in margins for its Australian food business to well above pre-pandemic levels. Credit: Shutterstock.
The nearly 20 per cent rise in earnings for their Australian supermarkets caught the attention of their customers and the nation's policymakers. In fact, this has even led to a series of inquiries concerning living costs.
As it turns out, the sector's preferred gauge of profitability, known as operating margins, has spiked at Woolworths from 5.3 per cent to 6 per cent.
This 6 per cent mark is the highest margin for the groceries division recorded at Woolworths in over a decade.
It's so high, in fact, that Woolworths now enjoys double the margins that some of their international counterparts earn in more competitive markets.
Woolworths CEO Brad Banducci states that this is not solely a result of increased sales, explaining that 'it is not a direct outcome of food sales within supermarkets'.
This announcement from Woolworths comes after Coles reported an impressive $1.09 billion net profit for the 12 months ending in June 2023, up 4.8 per cent compared to the previous financial year.
The nation's second-largest supermarket also generated an impressive $36.7 billion in supermarket sales revenue, a 6.1 per cent increase year-on-year.
Joseph Mitchell, the Secretary of the Australian Council of Trade Unions (ACTU), was shaken, remarking: 'It appears the average Aussie is feeling the pinch in their wallet while big businesses are boosting their bottom line.'
And he is not alone in this sentiment. Former regulatory authorities and economists have also attributed the expansion in profit margins to a lack of competition in Australia, where Woolworths and Coles control two-thirds of the market.
Furthermore, these studies suggest that the period from 2022 to 2023 could potentially witness increased stress on households, with the majority of anticipated interest rate rises occurring during this time.
Michael Brennan, the outgoing Chair of the Productivity Commission, further emphasised this concern. During a National Press Club event speech, he explained: 'One of the things that has been an inhibitor to competition in supermarkets has been planning at the state level…'
'Coles and Woolies are pretty well embedded in the planning systems, pretty good at identifying sites, potentially pretty good even at freezing out rivals.'
One notable instance is the sudden withdrawal of German retailer Kaufland from entering the Australian market after significant investment. This serves as further evidence of how challenging it is for new supermarkets to establish themselves in the crowded market.
Members, there's no doubt that it's a difficult situation for the everyday Aussie shopper. If you want to get the best value for your money, you have to stay well-informed to ensure you're not missing out on any specials or value deals.
What are your thoughts? Do you think supermarkets should pass these profits to customers as savings? Let us know what you think in the comments section below!
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