**Australia**: Woolworths Group Limited disclosed a 21% net profit decrease, amounting to $739 million, attributed to a 13-day warehouse shutdown from employee strikes. While recovery efforts progress, the company faces ongoing challenges with rising costs and changing customer behaviours amid economic pressures.
Woolworths Group Limited, a prominent supermarket chain operating in Australia and New Zealand, has reported a significant downturn in profits, reflecting a $190 million impact due to industrial action that disrupted warehouse operations and strained its supply chain. For the six-month period ending January 5, the company disclosed a 21 percent decrease in its net profit, which now stands at $739 million.
The downturn is primarily linked to a 13-day shutdown of warehouse facilities resulting from employee strikes, coupled with increasing store wages and evolving customer loyalty trends, as outlined in an announcement made to the Australian Securities Exchange (ASX). Chief Executive Amanda Bardwell acknowledged the profound effects of the strike on the company’s operations, which led to stock shortages across various regions. “In Australian Food, the team has worked incredibly hard to recover from the supply chain disruptions caused by industrial action in November and December,” Bardwell noted.
While the company has made strides towards normalising its operations, Bardwell mentioned that the recovery in Victoria remains incomplete. “While we acknowledge the material impact of the industrial action on our customers and team, we came to an agreement that is fair and sustainable and enables ongoing productivity improvements critical to maintaining competitiveness,” she stated.
Woolworths has indicated that in the absence of the industrial action, the decline in grocery sales would have been limited to five percent. The grocery sector’s earnings alone accounted for a one-off cost of $95 million attributed to the disruptions.
The resolution of the strike followed a December agreement with the United Workers Union (UWU) after over 1,500 warehouse employees protested working conditions and wages. This strike resulted in reduced stock availability across Victoria, the Australian Capital Territory (ACT), and parts of New South Wales. A spokesperson for Woolworths confirmed that the distribution centre in Dandenong South, Victoria, is set to reopen subsequent to the union’s approval of the new enterprise agreement. Bardwell remarked at the time, “With just over two weeks to go until Christmas, we’re now focused on getting products out of the distribution centres and restocking the empty shelves customers have experienced in the past fortnight.”
The UWU indicated that the strike was prompted by concerns regarding Woolworths’ performance management system, which monitors the productivity levels of warehouse personnel. Although the immediate disruption has been addressed, Woolworths continues to work towards stabilising its supply chain and rebuilding consumer trust in the wake of these events.
Looking to the future, Bardwell expressed caution over ongoing financial challenges as consumers remain wary in light of the cost-of-living crisis. She highlighted a trend where customers are gravitating towards more budget-friendly options while seeking out better deals. “While we continue to optimise our promotional activity, cost-of-living pressures for customers persist with value-seeking behaviours and cross-shopping expected to continue,” she explained.
Furthermore, rising livestock costs for red meat are anticipated to exacerbate financial pressures in the first half of 2025. In response to these challenges, Woolworths plans to enhance its promotional strategies and provide clearer price tags to assist customers in identifying discounts more effectively.
Source: Noah Wire Services
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