Australia’s biggest supermarket chain Woolworths has seen its profits surge as shoppers battle high inflation.
Chief executive Brad Banducci also received a 17 per cent or $1.25million pay rise as he spoke about customers doing it tough.
The Woolworths Group, which includes supermarkets and discount store Big W, recorded a $1.62billion profit in the year to June, up 4.6 per cent from $1.5billion based on total operations.
The company behind 995 supermarkets acknowledged this occurred as customers battled a cost of living crisis during fiscal 2023 year.
‘While the overall operating environment for the Group improved in F23 compared to previous years, global and local inflationary impacts have created a new challenge as our customers’ household budgets become increasingly stretched,’ it said.
Mr Banducci was paid $8.6million, as bonuses swelled his total remuneration beyond his $2.6million base salary.
This marked a $1.25milion increase from $7.39million in the previous financial year.
‘We needed to lean into the whole issue of inflation and delivering more value for our customers,’ he said in a video message released on Wednesday.
Revenue increased 5.7 per cent to $64.3 billion for the year to June 25.
Demand for groceries and other necessary household items remained strong as rising expenses forced consumers to cut back discretionary spending, pointing to a change in spending patterns after years of Covid-related disruption.
Australian supermarket sales were up 4.7 per cent to $41.4billion, with ecommerce sales rising 2.9 per cent to $5.1billion.
Woolworths has recorded a $1.62 billion full-year profit after tax, up 4.6 per cent from the prior year, a result basically in-line with expectations.
Food-price growth began to moderate in the second half, with prices even dropping for meat, fruit and vegetables.
Woolworths expects prices to keep rising in some packaged categories.
Big W had a strong first-half, but sales dropped in the second half – even beyond executives’ expectations – as consumers reduced their spending on non-essential goods, particularly after April.
‘The sector became extremely competitive with higher levels of promotions and discounts,’ Mr Banducci said.
So far those trends have continued in fiscal 2024, with solid growth in Woolworths’ food businesses but Big W sales down on the previous financial year.
Woolworths empathised with its customers doing it tough as its annual report revealed chief executive Brad Banducci earned $8.6million, as bonuses swelled his pay beyond his $2.6million base salary
Woolworths declared a final dividend of 58 cents per share, up from 53 cents a year ago.
Nonetheless, it noted the Reserve Bank of Australia’s 12 interest rate rises since May 2022 were a challenge, with the cash rate now at an 11-year high of 4.1 per cent.
‘Our ability to respond to our customers’ needs and expectations has been particularly important in the context of rising cost-of-living pressures in Australia and New Zealand caused by a high-inflationary environment and rising interest rates,’ it said.