Woolworths Limited (ASX:WOW) has been hammered on the market after reporting a 17% slide in full-year profit and cutting its dividend, with the softer trading update compounding investor concerns about the retailer’s outlook.
The supermarket giant’s shares plunged nearly 14% to $28.78 by mid-afternoon on Wednesday, on track to be the stock’s worst single-day performance on record. The rout came just a day after rival Coles Group Ltd (ASX:COL) delivered stronger-than-expected results, sending its shares to record highs.
The contrasting fortunes suggest shifting investor sentiment in Australia’s supermarket duopoly — and come against the backdrop of a higher-than-expected July CPI print on Wednesday, underscoring the continuing pressure on household budgets and retail margins.
Read more: Australian inflation overshoot in July unlikely to derail RBA easing path
Results miss and dividend cut
Woolworths posted revenue of $69.1 billion for FY25, up 3.6% but just shy of analyst expectations. Net profit after tax fell 17.1% to $1.39 billion, while group earnings before interest and taxes (EBIT) slid 12.6% to $2.75 billion.
The company cut its final dividend by 21% to 45 cents per share, bringing the full-year payout down 41% to 84 cents — well below last year’s level.
CEO Amanda Bardwell said the business had “taken action to reposition the group for long-term sustainable growth” following a “highly disrupted first half” but acknowledged trading remained “below our ambition.” She flagged that accelerating declines in tobacco sales would weigh on earnings by up to $100 million in FY26.
Softer outlook than Coles
Investors were also unsettled by Woolworths’ early FY26 trading update, which showed Australian food sales up just 2.1% (4% excluding tobacco) in the first eight weeks. That fell well short of Coles’ 4.9% growth (7% ex-tobacco) over the same period.
Coles’ ability to better absorb tobacco sales declines added to speculation it is winning the market share battle, compounding Woolworths’ challenges in its core supermarket division.
'Losing investor patience'
Josh Gilbert, market analyst at eToro, said the Woolworths numbers again underscored a company “quickly losing investor patience”.
“The supermarket giant’s challenges remain clear and its struggles persistent,” Gilbert said, pointing to the 19% drop in profits stemming from rising costs and weaker margins in the company’s core Australian food business, as well as a drag from its discount retailer Big W, with losses widening to A$63 million.
“Since taking the helm, CEO Amanda Bardwell has been more firefighter than visionary, putting out flames to steady the ship,” he added. “That fight is still ongoing, and the hard work of rebuilding lies ahead. While its cost-saving program of AUD $400 million lays the groundwork for the next leg of Woolworths’ story, execution will be critical to restoring investor confidence.”
Moreover, Gilbert concluded, the 21% dividend cut “will be a kick in the teeth for loyal shareholders who’ve endured zero growth from shares in the last five years, and that won’t do much for confidence”.