Woolworths Group Limited

Good morning, everyone. Thank you for joining us today for Woolworth Group's first quarter sales results for the 2026 financial year. I'd like to acknowledge the traditional custodians of the land on which we meet today, Dharong Country, and pay my respects to Elders past, present and emerging. Joining me this morning are Stephen Harrison, our Chief Financial Officer, Annette Carantoni, Managing Director of Woolworth Retail, Sally Copeland, Managing Director of Woolworth New Zealand, Amitabh Mall, Managing Director of Group EcomX, and Dan Haig, Managing Director of Big W. I will begin by acknowledging that the group's overall sales performance during the first quarter remains below our aspirations. However, the changes we've made to improve our offer in areas that matter most to our customers, value, convenience, and availability are being recognised, with group customer metrics up on prior periods, and an improvement in sales trends over the last month. Group voice of customer NPS increased by four points compared to the prior quarter, and three points compared to the prior year, driven by improvements in Australian food and New Zealand food. We have focused on rebuilding momentum in the short term, but are also clear on our longer term strategic priorities, which we laid out in August. And we've continued to make progress on these priorities during the quarter. Now turning to performance by business. In Australian food, total sales increased 2.1% and Woolworths feed retail sales, total sales increased by 3.8%, excluding tobacco, supported by e-commerce growth of 12.9%. While customers are recognising the improvements we are making, we know there is more to do to improve sales momentum in Australian food. In September, We uplifted our investment in rewards and e-commerce offers and weekly promotions on key family lines like nappies, bananas and chicken breasts to provide customers with more value and more reasons to choose Woolworths first. Item growth showed a modest improvement over the quarter but this was offset by an increase in deflation in fruit and vegetables in the latter part of the quarter. By category, growth in fresh and grocery food was solid while pet, baby and home essentials continued to underperform in store, reflecting a competitive market and a need for us to improve our customer offer. Average prices, ex-tobacco, in quarter one were down 0.3%, marking the seventh consecutive quarter of lower prices for customers, driven by deflation in fruit and vegetables as a result of increased supply on key lines like berries and avocados, partially offset by higher meat prices, which continued to be impacted by rising livestock costs. Long life categories including pantry, snacking, freezer and everyday needs remained in modest deflation during the quarter. We know our customers want reliable lower shelf prices every time they shop with us and we added over 100 products to the shelf price, bringing the total to over 750 everyday items. These lower prices are resonating with our customers reflecting in double-digit unit growth across the program and improvements in value for money up five points compared to the prior year and three points compared to the prior quarter. In e-commerce, growth in convenient on-demand propositions was a highlight, with e-commerce sales delivered or picked up in under two hours increasing by 39% as customers continue to value the increased conveniences. Cartology revenue grew 4.6%, albeit at a lower rate compared to prior periods due to cycling several successful promotional events in the prior year. Everyday rewards and services sales growth was driven by everyday mobile and insurance, with combined customers growing 5%. Active rewards members in Australia increased by 4.5% compared to the prior year to 10.5 million. In Australian B2B, sales increased by 6.2%, driven by B2B food with growth in PFD and export meat sales. In PFD, growth to food service and QSR customers remained strong. B2B supply chain sales declined on the prior year, reflecting the impact of a decline in tobacco sales on statewide independent wholesalers in Tasmania. Third-party supply chain sales through PC Plus increased, reflecting solid growth in international logistics and an increase in new and existing customers using our cross-stock warehouses. Sales momentum in New Zealand improved over the quarter as competitor activity normalised, with total sales growth of 3.2%, driven by strong e-commerce growth and successful promotional campaigns. Customer metrics in New Zealand continued to strengthen on the prior year with improvements in value for money and fruit and vegetables with metrics stable on Q4. E-commerce sales increased by 15.8% with penetration reaching 16.8% driven by strong growth in convenient on-demand e-commerce propositions like Milk Run and Direct to Boots. Everyday rewards, sentiments and engagement in New Zealand also continues to strengthen with customer advocacy up 11 points and active members increasing by approximately 250,000 compared to the prior year. In Big W, total sales including Big W market increased 1% with a more favourable sales mix reflecting an improved performance in clothing. Big W's gross transaction value, including Big W market, increased by 5.7%, with strong 3P growth. Sales in the quarter reflected a high proportion of full-priced sales, supporting improvements in range quality and availability of summer stock, favourable weather, and cycling significant winter clothing clearance activity in the prior year. As well as an improved performance in clothing, we saw solid growth in play and home, However, everyday sales remained challenged with a decline in cosmetics, hearty, and everyday essentials in a highly competitive market. Big W e-commerce sales increased by 12.3%, primarily driven by the inclusion of Big W market sales growth, reflecting the decision to integrate the marketplace and leverage the significant digital traffic in Big W. E-commerce GTV increased by 46.3%, with 1P e-commerce sales growing 6%. Pet stock sales increased 15.8%, largely driven by the opening of six net new in-quarter stores and the acquisition of Big Dog and Time Pet following the exercise of convertible notes. Convertible sales increased 3.9%, supported by value reset, increased marketing and solid own brand and e-commerce growth. With only eight weeks until Christmas, we're determined to give customers every reason to do their entire shop with us at Woolworths. We have strong plans in place to deliver a fantastic festive season for our customers, starting with Halloween this Friday, with much to look forward to, including a refreshed Christmas seasonal range, which we know our customers will love. Woolworths food retail sales in quarter two to date have increased by 3.2% or 5% excluding tobacco, as we continue to focus on rebuilding momentum. Looking ahead, we are cautiously optimistic about our key trading quarter and remain focused on getting back to our best. It will take some time to see the full benefits of our strategic actions to be realized, but we remain confident the steps we are taking will lead to meaningful improvements for our customers and, importantly, our shareholders. I will now turn over the call to the operator for questions To give everyone a chance, can I please ask that you limit it to one question per person and then rejoin the queue with any follow-up questions. Thank you.

Thank you. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star 2. If you're on a speakerphone, please pick up the handset to ask your question. Your first question today comes from Adrian Limmie with Citi. Please go ahead.

Good morning, Amanda and team. I was just interested in that commentary on October. Is it a softer comp than what you saw in that September quarter? And can you clarify, are you seeing the improvement coming from online, given all the bonus points offers we've seen, or is it mostly coming in in store? Thank you.