Woolworths Holdings Ltd

Thank you for standing by and welcome to the Woolworths Group Limited FY24 full year earnings announcement. All participants are in a listen-only mode. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Brad Banducci, Managing Director and CEO of Woolworths Group. Please go ahead.

Good morning, everyone, and welcome to Woolworths Group's full year results for the 2024 financial year. Joining me for today's presentation are Stephen Harrison, our CFO, who will present our financial results a little later, and CEO-elect Amanda Beidel, who will be presenting with me on today's call. Also joining us in the room are Spencer Son, Managing Director of Woolworths New Zealand, Vaughan Ingram, Managing Director of W Living, Dan Hank, our new father. Congratulations, Dan. on the weekend, Managing Director of Big W, and thank you for coming in. Guy Brent, Managing Director of the Wars Food Company, and Paul Harker, our Chief Commercial Officer for Australia Food. In the spirit of always pushing forward, I'm going to try a new thing and actually talk to the slides in the right sequence. So I'll call out the slide and then give you the highlights on it as we go through our investor presentation. Starting on page two, I would like to acknowledge the traditional custodians of the land on which we meet today. I'd like to pay my respects to Elders past and present. Then moving on to talking about performance. I'll start with an overview of the group's performance and our progress on our strategic agenda. Amanda will then provide an update on our digital loyalty and e-commerce achievements as part of her Willie's Ex portfolio. And then Steve will talk to the financials and he'll come back to me to cover current trading followed by Amanda to finish with some of her observations and priorities moving forward. On slide four is really our summary of the year that was. And I think as you all know, the group's full year financial performance reflects a very challenging operating environment impacted by elevated cost of living pressures and a highly competitive market. After a strong H1, we experienced a rapid change in customer expectations in Q3, which led to a loss of sales momentum and a decline in customer scores. We worked hard In Q4, to address the areas most important to our customers, with value for money and shelf availability a particular focus, pleasingly our customer scores and underlying trading momentum improved in Q4, and this has continued into F25. Group normalized sales increased 3.7% per year, with around half of the group sales growth driven by e-commerce sales, which increased by 18.5%. Group normalised EBITs for four significant items increased 1.1%, with the group EBIT margin of 4.7%. In Australian food, normalised sales increased 3.7% and EBIT increased 6%, with about three quarters of Australian EBIT growth attributable to the profit improvements in Woody's Eggs. New Zealand Food and Big W both had a challenging year, impacted by value-conscious customers, Importantly, both businesses made good progress on their transformation plans, but there remains more to do. On slide five, we're just giving a recap on how we see the customer at the moment. And as, again, you would all know, the persistent cost of living pressures came to a head for our customers during the year. With customer behaviors catching up with customer sentiments, which have been prevalent for some time, we've sort of seen the customer talking about stress but not acting on it, and that's certainly changed, in particular in the second half. Customers tell us they've been finding more ways to save, such as cutting back on non-essential items, cross-shopping retailers, and reducing eating out occasions. Buying more and special has also seen a significant increase on last year. This is as ongoing mortgage and rent-related financial stress continues to put real pressure on household budgets, especially for younger singles, couples, and families. Let's go in a little bit more into the detail on that on slide six. While cost of living pressure is specific, customer spend on groceries as a percentage of household spend is declining. This is in part due to the significant moderation in grocery inflation with our average prices declining on the prior year in both Q3 and Q4. And then we've also begun to track a typical Woolies trolley which includes 32 key household items which is around down around 1% compared to a year ago. Coming back from the customer to how they score in us, our voice of customer scores reflect the customer experience during the year, with group bulk NPS of 47, down 1% in the prior year, and reflecting the particularly challenging environments in late Q2 and Q3. However, thanks to the efforts of our team, store controllable box scores were resilient, with customer care scores remaining above 80% across the group and largely unchanged in prior periods. In addition, a strong focus on improving shelf availability and addressing value for money perceptions led to improvements in Q4 relative to Q3, but as always, with more to do. On slide eight shows really break down a different profile by half and even by a quarter for Australian food in F24. You know, we often talk to things being a story of two halves. This really, for us, was a story of four quarters. Sales growth slowed significantly in H2, as you can see, from low inflation to item growth, and that was particularly true in Q3. However, we worked hard to focus on getting things right for our customers, and PZ saw a modest but very importantly consistent recovery in Q4, led by item growth, which we have seen continue into S25, and which, of course, we need to continue to build on. Moving to slide nine, it just gives you a sense of how we are thinking about helping our customers find value, feel valued, and connect value. We need to do a better job of communicating the great prices and specials to our customers across the shop, and we have made a number of adjustments in that regard. including making our price tickets and unit prices easier to read, continuing to prove our own brand range and tailor our range in each one of our stores. This week's launch of lower shelf price includes a price reduction on many household essentials by as much as 20%, providing customers with yet another way to get more from their Willys shop. Consistently good shopping experiences means getting the fundamentals right. And we have made good progress in addressing shelf availability in the second half through a combination of increasing stock weight on key lines and improving fresh service levels. Finally, we made it easier for our, we are making it, or have made it easier for our customers to connect value across the group by improving our online and digital experiences. And I won't steal Amanda's thunder, I'll let her talk to that a little later. I am actually tempted to steal Amanda's thunder. I shall resume. On slide 10, I wanted to provide a brief update on Woolworths New Zealand and VW. We've made good progress on the transformation plans across the year in both of these businesses, but there remains more to do with financial performance well below potential for both businesses. In Woolworths New Zealand, improved value communication has resonated with customers, and this is reflected in the strong improvements in value for money scores, up five points in the last year. We also rebranded 72 stores to Woolworths New Zealand by the end of the year. In fact, I think we sit on 77 as I talk, with another 60 planned for F25. Importantly in the rebranding, we get a sales lift of just over 1% as we rebrand, which is an incredibly important positive for the future. Following its official launch in February, Everyday Rewards New Zealand has grown to 1.6 million active members at the end of the year. I think we had another 460,000 customers join our Everyday Rewards membership program in New Zealand during the year. And we extended our lead in e-commerce as we rolled out more convenient services for customers like direct to boot and launched Mook Run to really strong residents in New Zealand. Christchurch Fresh DC had an immediate impact on availability and fruit and veg customer scores on the South Island. Our overall focus on fresh has led to strong growth in fruit and veg and meat in Q4 on both islands. Turning to Big W, the rollout of our health and beauty shop-in-shops has proved popular with customers with over 100 plans for F25. We also launched the Big W Market before Black Friday last year, which has materially increased the online range we have to over a million products for our customers to choose from, and this additional short-term choice, not only building the basket but also driving more traffic to the BW digital platform. The reset of our spring and summer clothing range, some of which you can see in stores now, has been another important step during the year with the new simplified range focused on more entry price points, improved quality and fit. I think 80% of our products in the new range are under $20 in price. And I think that's really important. It's really focused on delivering real value at opening price points in those key categories. Finally, leveraging group capabilities and new technology to improve processes in VW remains an opportunity for this work to continue into F25, including the enormous potential of RFID for us in getting the right color, size combinations available for our customers' store. I will cover the outlook for both businesses a little later in the presentation. On slide 11 is a reminder of how we think about our group and the businesses and platforms within it that work together to enforce each other to deliver on our everyday retail strategy. I will now hand over to Amanda. It's a very similar slide, by the way, you've seen before. It's just been fine-tuned as we continue to evolve the group and the strategy and the progress we've made therein. But I'm now going to turn over to Amanda to talk about our progress across digital rewards and e-commerce in F24. Over to you, Amanda.

Thank you, Brad. Turning to slide 12. Customers are increasingly connected, and it's important that we continue to enhance our digital experiences to make engaging with us easier and seamless. Growing digital engagement is also driving more sales, both in our store and online, and more opportunities for our supply partners through cartology to connect with customers in a personalized way. Since the start of the year, weekly visits to our digital assets across the group have surpassed the number of transactions in physical stores, which reinforces the importance of digital experiences as part of the customer journey. In F27, average traffic to group digital platforms reached 27.2 million visits per week, up 19.7% on the prior year. Digital tools such as in-store shopping mode, shopping lists and the best unit price filter and special filters continue to enhance shopping experiences and increasingly are helping customers manage their shopping budgets. Turning to slide 13, Active Everyday Rewards members in Australia reached 9.8 million with more than 770,000 new members joining the program in F24. Our members are also finding more value with boosting members accessing personalized offers up 9% on last year and who, on average, earn their $10 off five times faster than non-boosting members. Everyday Extra also continues to grow strongly with paid subscribers more than doubling on the prior year. One of the ways we're continuing to grow the benefits for our members is through new partners. And during the year, we welcomed Accor, Milk Run, and PetStop to the program. Finally, as Brad mentioned, in Everyday Rewards is now a Trans-Pasman program following its launch in February in New Zealand. Turning to slide 14. Group e-com sales for F27 were a little under $8 billion, with normalized growth of 18.5%. led by Woolies X e-commerce sales growth of 20.2%, which remained strong throughout the year. Including Milk Run, Australian food e-com sales increased by 21.3% for F24. Strong sales growth, higher pickup mix, and productivity programs across fulfillment operations and last mile deliveries led to material improvement in profitability. with EcomX normalized DAP up 119%. Ecom growth is being supported by the expansion of our convenience propositions, with 86% of our B2C Ecom orders now fulfilled within 24 hours, an increase of six points compared to the prior year. During the year, we launched a new sub-60-minute collection service, direct-to-boot now, in 307 sites, in addition to our 727 direct-to-boot sites across the country. We also established Home Run as the group's last-mile delivery service provider with 20 million orders delivered since launch. I'll now hand back to Brad to cover the progress within our retail platform and adjacencies in the year.

Thanks, Amanda. And just while you were talking, the team corrected me. We will have a million products on the Big W market. It's 100,000 as I speak today, so... Apologies, I got ahead of myself. On slide 15, I want to provide some examples of how our platforms, our retail platforms, are strengthening our overall capabilities and growing their contribution to our group. I'll talk in a bit more detail on later slides on cartology and WIC, so I'll just focus now on Primary Connect, or PC Plus, and what was 360M property. Primary Connect grew through a third-party business, PC Plus, over the year, And it was terrific. We got some leases assigned to us from Scotts, and we now have got those cross-stock DCs really working to potential. And we're serving over 1,300 supplier relationships. And this is both value for us in a monetary sense, but even as importantly, it really helps us with end-to-end availability for our customers and these partners. If I just talk to Woolies360 and property, Woodies360 comprises our format and development team and they deliver 14 net new stores for the group during the year, alongside 60 renewals. And while our new and renewal stores are delivering growth, the platform has also delivered and is continuing to deliver material cost savings as it houses our Smarter Operations set of initiatives, including the continued rollout of electronic shelf labels, scan assist, double welcome gates in front of store upgrades, and I'm sure I'll get questions on those later. I'll come back to cryptology and WIC in detail in subsequent slides. Turning to slide 16, we're just on the supply chain for a moment, and this is the David Erickson slide, and I'm sure you'll have additional questions on this, David, if you're online. This is just as we're committed to just give a little bit of progress on how we're progressing on our plans in the space, and we are, of course, the headline is we're on track with our Moorbank national DC and regional DCs on track for their commissioning. In that context, our Melbourne South regional DC, which was our first automated DC, has provided a blueprint for what we are setting out to achieve in New South Wales. And I'm pleased to be able to say that MSIDC had a throughput of 2.5 million cartons per week in F24 with the cost per carton approximately 30% below what it would have been if we were still operating our previous Melbourne warehouse It has also improved pick accuracy, achieved better safety outcomes, and is currently delivering returns in excess of 10%. As the co-located DCs and Moorbank come online over the next years, we expect them to drive material benefits for our New South Wales customers and, of course, the wider group. As disclosed in Q3, we expect to incur approximately $90 to $100 million of incremental costs associated with the commissioning, ramp-up, and dual running costs in F25. On the same topic, construction of our Auburn CFC in partnership with CANAP is also progressing well, reaching completion of automation installation in F24 and on track to go live in the second half of F25. Coming to cartology, on slide 17, you see the growth over the last five years of about a 34% CAGR since its formal launch in F20. F24 revenue increased by 9%, relatively low by standards in cartology. We delivered over 5,000 campaigns, while also providing, very importantly, a valuable media inventory for the group. Hopefully everyone is aware, the media inside, the inventory inside cartology, we reserve 50% for the group, and 50% is then monetized through generally endemic, but increasingly also, in some instances, non-endemic advertisers. And so, the value for the group is as important as the value is, say, monetized through our clients. Cartology's screen network continues to grow both on and off network with around 400 health and beauty screens added across all the supermarkets in the half in the year, and our facility centers partnership adding around 1,000 screens in over 50 shopping centers, and that is in the process of being rolled out as I speak. Digital revenue is an increasing contributor to growth in cartology products quite strongly in the year, and we have just launched a new on-site brand video on willworth.com.au in June, which is already seeing strong demand. In fact, it's already sold out in terms of the capacity we have for that particular product. If I then just move to the group's analytical platform WIC, which is continuing to deliver high-value use cases across the group, including which was our first real delivery product of Next Gen Promo, but we also now have Smart Clearance, Quick Assist, and many others. And that continues on. Importantly, during the year, we also relaunched what used to be called Quantium FMCG as WIC Consumer, and we are leaning in with about 500 suppliers to give them the right data-led consumer insights to help them make better decisions, including in their relationship with Orbit. Finally, and very importantly, WIC has also taken the lead in AI adoption across the group with 10 use cases, as I'll talk in pilot or rolled out, that leverage Gen AI to drive better customer and team experiences, as well as, of course, deliver incremental productivity benefits. An example of this is TeamCoach, which leverages AI to support our customer service agents in our customer hub or customer service for our customers. We expect to accelerate our Gen AI adoption and capability across the group in the year ahead, as you might expect. And moving to slide 19, and the Woolworths Food Company and the change in shape of it, we know that our own and exclusive brands provide exceptional value and quality, and are continuing to grow and improve these ranges. It's a critical part of our value proposition for our customers, and particularly in the current environment. But our own brands also provide a key role in making healthy items more accessible and affordable despite the challenging economic environment. With, interestingly, macro growing by 12% compared to the prior year. That's on its way. In fact, it's annualized, and I think I'd loaned about a billion dollars to Macro as a brand, and really resonating where customers are needing to trade down in those more health-related categories. Importantly, As you said in the announcement, we're also moving to 100 ownership of the business of PFD in F25, following an agreement to acquire the remaining 35% of the business from the Smith family. This is on the back of really strong growth in the business over the last couple of years, including 9% in F24, and with the business now on a run rate of around $3 billion, if you just, again, normalize it going forward. I just should recognize the material contribution of the Smith family to the business, and what a terrific and constructive partner they have been to us in the last couple of years. Finally, within the Wall Street Company, we also have our sourcing initiatives and our secondary processing. That includes Green Stock, which is our end-to-end meat business, and that's continuing to help us deliver lower prices for customers across the meat category. And actually, GreenStock is now supplying meat to our PFD customers as well via the Arlo brand, with PFD actually in turn starting to provide value-added fish processing back into supermarkets. So a nice, real better together moment between those businesses. Changing gears and turning to sustainability, and you will of course see that we're also launching our sustainability report today and modern slavery statement. And you can look for a lot more detail in those documents. But just some of the highlights that we just wanted to call out in some cases with TRIFA low light. So let me just go through those. While severity rate improved in F24 due to fewer severe injuries and improved report in our TRIFA, performance was disappointing due to an increase in medical treatment and restricted work cases driven by manual handling injuries. As you might expect, We have a whole range of initiatives underway to help reduce these injuries, including the introduction of improved material handling equipment, task redesign, and upskilling of our team. Also then, just moving on to Scope 1, 2, and 3 emissions. In F24, our Scope 1 and 2 emissions were 42% below our 2015 ratio, with the current year improvements supported by the installation of an additional 53 solar systems across the group and a new energy partnership with Keenco in Queensland as we transition to 100% renewable energy. And another one that I just wanted to call out, one that I'm personally immensely proud of, is our Mini Woolies program. And we've continued to grow this program with 66 stores at the end of F24. including a store in every state and territory in Australia, and our first two new stores in New Zealand. The program provides hands-on learning experience for students and job candidates living with disabilities. More than 6,000 students have completed the program since its launch, and as I speak, I think we actually have 73 woollies, many woollies, with an aspiration to get to 100 at the end of this year. I'll now turn over to Steve to discuss our financial results, and then we'll come back to Outlook over Tuesday.

Thanks, Brad, and good morning, everyone. I'll start today on slide 23 with the F24 four-year results summary for the group. F24 included a 53rd trading week, so unless otherwise stated, all growth rates mentioned will be on a normalised basis for the removal of the 53rd week. Group sales for the year of $67.9 billion increased by 3.7%, with all businesses other than Big W growing sales on the prior year, excluding pet stock group sales increased by 3.1%. Group EBIT before significant items was $3.2 billion, an increase of 1.1% on the prior year or 0.3% increase excluding pet stock. Half to EBIT declined 1.3% on the prior year as growth in Australian food and Australian B2B was offset by lower earnings in New Zealand food and BW. The group EBIT margin for F24 was 4.7% down 12 basis points on the prior year. Group NPAT before significant items was $1.711 billion, a reported decrease of 0.6%, with EBIT growth offset by higher interest and tax in the year. Basic EPS on the same basis declined by 1%, broadly in line with NPAT, and I'll discuss our final and special dividend later in the capital management section. Turning to slide 24, our group trading performance in Australian food, total sales for F24 were $50.7 billion, an increase of 3.7%, with sales growth slowing to 1.8% in the second half due to moderating inflation and lower item growth despite continued strong growth in e-commerce. Australian food even increased 6% for F24, and 2.2% in half two, with around three quarters of the Australian food EBIT growth for the year driven by WooliesX. In Woolworths Food Retail, which is the combination of our stores and e-com businesses, EBIT increased by 3.5%. WooliesX profitability increased 94%, reflecting strong sales growth, improved e-com profitability, and an increased contribution from the other WooliesX businesses, including Cartology and our Everyday Services business. The DAP and EBIT margin of 4.4% increased by 154 basis points compared to the prior year. Australian B2B sales for the year increased 4.3% in F24 and 5.9% in half two. PFD's trading performance remained strong with sales growth of 9% driven by growth across all its key segments. Australian B2B EBIT was up materially in F24 benefiting from the exit of the summer gate and international businesses announced in the prior year. and EBIT growth in PC plus our third-party transport business. New Zealand food sales increased by 1.3% for F24 and 0.3% in half two. EBIT of New Zealand, 108 million, declined by 57% versus F23, impacted by value-conscious customers in a highly competitive trading environment and materially higher wage costs. As announced in half one, we recognised a New Zealand $1.6 billion impairment during the year, which has been treated as a significant item. BW also had a challenging year at F24, with sales declining 3.9% and EVAs down by 90%, reflecting a challenging trading environment with customers cutting back and trading down in discretionary categories, which led to lower sales, elevated markdown and clearance activity, and deleverage despite good cost control. Our other segment includes group functions such as property, group overheads, and the Woolworths Group's investments in pet stock, Quantium, MyDeal, and Endeavour Group. The segment recorded a loss before interest and tax of $123 million, which was a reduction of 37% on the prior year. This was due to the even contribution from pet stock from January and lower advanced analytics and M&A costs, partially offset by a lower contribution from our shareholding and Endeavour Group. The group reported significant items of $1.6 billion related to the previously announced impairment of New Zealand food and a mark-to-market loss of $209 million on our investment in Endeavour Group following the loss of significant influence both reported in half one. This was partially offset by a net re-evaluation gain of $107 million in relation to put option liabilities over non-controlling interests with the minority shareholders at PFD having communicated their intention to exercise the put option effective 30 June 2024. Moving on to slide 25, F24 has been a significant year of wage inflation across the group. We've worked hard to partially offset some of this inflation in F24 through a focus on productivity and end-to-end efficiency and delivered a solid increase in productivity in F24. We have a strong productivity pipeline for F25 and on this slide we've laid out some of our major productivity initiatives. The biggest opportunities are in our stores and e-com business, where the majority of our costs reside. Some specific initiatives include the ongoing rollout of electronic shelf labels, stock locks initiatives, including full-year benefit of the scan assist and welcome gate rollouts, as well as pick and last mile optimisation opportunities in e-com. Part of the benefit in F25 will come from the annualisation of initiatives landed in F24, which gives us confidence we can deliver good savings in F25. Moving to slide 26 and our balance sheet metrics, average inventory days were up marginally, 0.3 days on the prior year, reflecting a conscious increase in inventory holdings in the second half to improve in-store availability for customers as well as an increase in imported stock holdings impacted by increased shipping delays and transit times. However, this was offset by average payable days, which increased by 2.3 days in F24. Big W's closing inventory was marginally higher than F23, but this was driven by an early receipt of seasonal inventory. Closing inventory health improved versus F23, with the proportion of inventory considered aged and quit stock below the prior year. ROFI increased by 78 basis points compared to F23, largely due to higher group EBIT, and a reduction in average funds employed driven by the $1.5 billion impairment of Goodwill in New Zealand in half one. Excluding the New Zealand Goodwill impairment, ROFI was largely flat of four basis points on the prior year. On slide 29, it's just a reminder of our capital management framework, and during the year, We continue to generate strong cash flows which were reinvested into sustaining our business, growth initiatives and maintaining a strong dividend for shareholders and I'll provide further colour over the following slides. Moving to the cash flow on page 28, group generated operating cash flows of $5.9 billion for the year driven by solid EBITDA growth offset by net working capital outflows. The movement in working capital in the year reflects higher year-end inventory holdings, offset somewhat by higher payables. While payables increased on the prior year, a non-comparable supplier payment in the 53rd week in New Zealand impacted the closing balance of payables. Cash interest costs increased 8.1% larger driven by higher floating interest rates on bank debt in the year and tax paid increased 31.9% compared to the prior year driven by higher taxable income for F23 paid in F24 and cycling and tax refund received the second half of F23. Cash flows on investing activities increased 23.5% to $2.3 billion. The increase compared to the prior year was mainly due to the group's acquisition of a 55% interest in pet stock for $476 million. I'll cover CAPEX on the next slide. And finally, our normalised cash realisation ratio was 97% due to higher net investment in inventory. On to CAPEX on slide 29, operating CAPEX for the year was $2 billion, in line with our guidance. sustaining CapEx account for around three quarters of our total spend with an increase driven by high spend in renewals and supply chain. Growth CapEx was marginally down on the prior year, while investments in productivity increased in the year, including the ongoing rollout of electronic shelf labels as well as scan assist and the implementation of double welcome gates and front of store upgrades. CapEx also included $117 million on projects with strong sustainability benefits in areas such as refrigeration, transport decarbonisation initiatives, and solar. In F25, we expect operating capex to be in the range of $2 to $2.2 billion, reflecting ongoing investment in our supply chain network, and increased store renewal numbers planned for F25. Moving on to slide 30, the board today approved a final dividend of 57 cents per share, bringing the total ordinary dividend for the year to 104 cents. in line with the prior year, with the full year dividend payout ratio of 74.3%, in line with our typical 70 to 75% payout ratio. The Board also approved a special dividend of 40 cents per share to return to shareholders the proceeds from the sale of 5% of Endeavour Group in May. The final and special dividends will release over 500 million of franking credits to our shareholders. So this is the balance sheet. Our net debt to EBITDA ratio was 2.6 times at the end of the financial year, in line with F23. It's important to note that this is before the payment of the special dividend, as well as approximately $400 million to acquire the remaining 35% of PFD, which will be paid in the first half of F25. We remain committed to solid investment-grade credit ratings and have significant headroom under our current ratings of BBB from S&P and BAA2 from Moody's. In October 23, The group issued $450 million of domestic medium-term notes with a tenor of seven and a half years. The proceeds were used to refinance $400 million of domestic medium-term notes that matured in April 2024. And finally, I would just like to say a huge congratulations and thanks to Brad for an outstanding contribution as CEO and to thank you for your leadership over the last eight and a half years. And with that, I will turn back to you.

Thanks, Peter. Wasn't scripted, but much appreciated. Thank you. Going on to talking about our trading and outlook on slide 32. Our sales momentum in F25 to date has continued to improve across the group, in line with our improving customer scores and the momentum we've started to see in the context of Q4. In Australia, food sales for the first eight weeks of F25 have increased by 3%, driven by item growth and modest inflation, with e-commerce continuing contribute strongly to our growth. As Steve talked about, we have strong interim productivity plans in place for the year ahead, which are important to delivering our results in F25, given elevated wage inflation and mixed pressure on our cost base. And hopefully, as everyone is aware, with our enterprise agreement, it's a 3.75% increase in our wage base, plus a half a percent of super on top of that, which is much needed and deserved by our team, I should add. We remain focused on delivering on our customers' shopping baskets, but expect cost-delivering pressures to persist, with cross-shopping and trading down continuing. Australian food sales have increased by 1.5% in the first eight weeks, also driven by item growth, and we expect F25 EBIT to be above F24, with stronger growth in H2. But it will take a few years for the business to return to its full earnings potential. And upward also, the same wage pressure in New Zealand, actually slightly more pronounced than in Australia. Big W sales are broadly flat for the first eight weeks, but with material item growth. But this is a middle set by a material reduction in turn in average sale price. For F25, we also expect Big W's EBIT to be above F24. However, the outlook is contingent on successful trading during the key holiday and Christmas period, and of course an improved trading performance I will now hand over to Amanda to provide some observations as she prepares to step into the CEO role effective Monday the 2nd of September. And for my last couple of weeks, Amanda, we will be trading places and I look forward to working for you for the last couple of weeks.

Oh, me too, Brad.

Treat me kindly in that process. Over to you.

Thank you. Thanks, Brad. The last few months have been really energising as I've spent time with our customers, travelled to our stores and DCs, listening to our team and connecting with our suppliers and partners. It has been an incredibly valuable experience and a privilege to do this ahead of stepping into the role on the 2nd of September. It has only reconfirmed my view that we have a strong, talented and hardworking team and so many great opportunities to grow in the years ahead. I also worked closely with Brad, the wider leadership team and the board to shape our group plan for the next few years. Looking ahead, my excitement at coming into the role is based on a strong conviction that it is our people, our commitment to building better experiences for our customers together for a better tomorrow that will be critical to our success in the years ahead. As Brad mentioned, while sales momentum so far in F25 has improved, Cost of living pressures for our customers are expected to continue. And as we are operating in an environment that can rapidly change, our everyday retail strategy positions us well for the future that can't be achieved without consistently great experiences for our customers and members. Delivering against our trade plans and getting the basics right every day on value, availability, range, service and convenience will be key to doing this. We will also continue to create the future of everyday retail, leveraging technology and AI to transform how we work and how our customers and members shop our brands. Finally, we need to continue to look for ways to simplify how our teams work and make it easier for them to have an impact and care for customers. Brad, I would also like to take this opportunity to thank you as our longest serving CEO since our founders for the remarkable job that you have done in transforming Woolworths and firmly putting customer and team first. Thank you, Brad.

Thank you, Amanda. I'll now turn the call over to the operator for questions. Can I please ask, we're limited to one question per person, to allow everyone to have a chance.

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 then two. If you're using a speakerphone, please pick up the handset to ask your question. We ask that questions be limited to one per person. Please rejoin the queue for any follow-up questions. The first question today comes from Sean Cousins from UBS. Please go ahead.

Thanks, good morning Brad and thank you for answering my questions over the years, the answers have always been interesting and provided depth of insight so thank you for that. A question maybe just in Ausfood and execution in store, when we talk to Woolworths shareholders They're somewhat cranky at times just in that the stores are in very good shape. They're refurbished and you've got advantages across data inside loyalty supply chain. But we're getting consistent feedback from suppliers about weaker in-store execution. And could you touch specifically whether electronic shelf labels are weighing on weaker promotional participation as they don't screen value like bright yellow paper tickets and whether or not there's enough inventory in store as stock out seem to be an issue when we walk stores. Thank you.

Thank you. Thank you, Sean. Let me just start by saying that promo pen has really lifted in the last quarter. So it's up, you know, just over 200 basis points for concrete. Give me the exact number. So we don't have an issue with customers actually responding to our promos, and so a very good response right there. Sean, we were very avert that coming out of H1 into H2, we had some availability issues, in particular as we installed new SAP UDF system and some of the fair share mechanics and ways in which we did that meant we had some stock challenges there and they were exacerbated by some of the other challenges we had in the year. So shelf availability is an enormous opportunity for us. I think we can all agree. That said, it's continuing to improve week on week and actually as we stand here on average we're looking in good shape. Our biggest issue right now is though, is not whether on average we're good. It's just with the promo pen that we're getting, we just need to make sure that we are building enough stock based on forecast, not based on history. And so a lot of work, again, on that issue. On ESL itself, we also asked ourselves the same question. We do not see a material difference across our network between an ESL store and a non-ESL store in promo pens. That said, one of our big initiatives, Sean, is to use digital to help our customers better find value in our stores, and I don't want to overplay it. As I speak, we've got probably somewhere in just over half a million customers in the in-store shopping mode using our app in-store to make decisions, and we expect that to buy more than that. And when they are using it, you know, things like Ask Olive, Sean, you can actually ask where a product is and we'll give you the product and the price becomes important. The best units also, the watch list and so on. So we have a great value proposition in store, but we can always do more to help our customers find that. Finally, as I speak, if you look at the number of products on promotion, the material are higher right now than Kohl's. and our price index against Coles and against Aldi in particular is as good as it's ever been. So there's no issue on us being robust in terms of making sure that we've got the right pricing out in our business. And finally, this week, if you go into our fourth, and I know you will be in there, Sean, and I hope you had a good trip to Lane Cove a few weeks ago, and I hope you went to Woolworths and you checked out the competitors. You'll see our new ticketing solutions in there, particularly with our new lower shelf price. And there's been a lot of consumer research we've done about resonance on those tickets. And it's the first in all series of evolutions you'll see in the next couple of months.

Got you. Thanks, Brett. But it doesn't seem as though there's anything fundamentally wrong, but you're not executing as well. That's what we're trying to square in terms of what's going on.

Yeah, I see upside. If you look at our unit growth, we're feeling pretty good about things. We always want more, let me just say. I'm looking at Paul as I speak. But when we see the unit growth and we see how we resonate with our customers, we are not in a bad place. But is shelf availability an opportunity, an upside sales opportunity in S25 better? In particular, as we get into the second half, and in particular, as we get into promo lines or our power lines in store, you'll see changes in the way we think about the 250 lines that are available so material to our business in the order of 20% of our sales. So rest assured of our focus on availability. But I wouldn't like anyone to confuse off-location displays or anything like that with fundamentals of trading because it's not true. And certainly that's also the case with the ASEL, although we can do a better job with shrouds, got the new colors coming out, got the new font size being launched, if you look at the ASEL, and of course in the install,

Thank you. The next question comes from Adrian Lemmy from Citi. Please go ahead.

Good morning, all. My question is actually longer term, if I may, and it may be for Steve. Look, I understand SAP is requiring all companies globally to upgrade their ERP systems to the S4 HANA system by 2028. I've heard this is a very complex project and would take a number of years. I'm just interested if you can talk to where you are in that process I understand you're on the SAP systems now, expected costs and whether you can manage that through other savings, please.

Adrian, did he pay you to ask this question? I feel like he did, actually. We actually just talked about it in some detail at the board yesterday. So, Steve, I know you can talk about it at length. I'll let you give a brief answer in there. in that context.

Yes, thanks for the question. So we've been going through various stages of upgrade of our SAP systems. So we're on a cloud version of the previous version, ECC6, and we're working through the transition to SAP S4 HANA. It's important to note we've actually previously upgraded our retail and store systems and so we see this actually as a less complex upgrade than other organisations where we feel like the changes are very manageable and we should be able to manage that change within our existing CapEx envelopes. We would anticipate the changes happening over the course of calendar 2026.

Thanks, Stephen. The way I understand it is that with this project, maybe more than half of the cost would have to be expense. Would that expense be able to be managed within budgets? Could you reduce discretionary IT spending to offset, please?

We would expect to be able to manage them within our envelope, both CAPEX and OPEX. Thanks Adrian. Thank you. It's an upgrade, not a brand new implementation for us.

Thank you. The next question comes from Tom Carrath from Baron Joey. Please go ahead.

Morning guys. Just one on the CAPEX. I suppose, surprised and disappointed that it's going up again in 25. It looks like sustaining CapEx is kind of continuing to step up. And I guess it begs the question, is the business a lot more capital intensive now? And you have to do a lot more to stand still because we're not really seeing it come through with faster growth. I don't know, maybe Amanda's probably the best place, given that she was involved in the planning, to answer that one. But I don't know, Brad, if you have any thoughts on that as well.

I'll make a comment, push it to Steve, if that's okay. Tom and I, we hope the Kirith family is all very loyal online shoppers and the family is doing well. It's one of our most important e-commerce shoppers. But, Tom, you're looking at a peak right now, really, on with the supply chain upgrades that we've got, really. chain upgrades laid on top of our renewal program, which is actually delivering what we need it to be. So it is that peak in that supply chain. It's our first automated CFC outside of Moorbank, and then the warehouse upgrades that we're doing in New Zealand. So it is really driven by that combination of factors more than by anything else. Intellectually, as you go forward, and apropos of the comment on IT, different issue and focus area for us, but I'll let Steve give some of the specifics on that.

Yes, I mean, just building on your point, one of the issues from how you manage these is they are long-dated projects. So we announced the Moorbank precinct over four years ago, I think close to four years ago now. And so we're We'll be opening the National Distribution Centre in the first half of F25. We'll open the Regional Distribution Centre, so essentially the replication of MSRDC for New South Wales, our biggest market, in F26. They're long-dated projects where you take the capex up front and you see the benefits once you get to scale. So we're confident we're going to get the returns from these projects. Part of the reason we included MSRDC an update on MSRDC in the analyst slides, is to just demonstrate actually the investment is paying back for us. It is a sustaining investment, as in we're out of capacity in our existing sheds. And so this is about unlocking growth for the future, but getting efficiency benefits from it and store benefits and customer benefits from better availability. So your point is noted on that. the timing of the capex versus the realisation of benefits, and we're very focused on making sure we realise those benefits. But we are in the peak of that supply chain transition right now. And to Brad's point, we haven't done enough renewals, or as many as we would like in the last two years, and we consciously want to get that renewal number up in the next 12 months.

And just on the renewal process itself, as the blueprint changes, we're starting to get even more excited

Thank you. The next question comes from David Errington from Bank of America.

Please go ahead. Morning, Brad. If I could ask you this question, because Steve won't answer it, but if you could answer it, that would be great. Brad, what really struck me was how much the stores went backwards in terms of EBIT in that second half. So if I draw your attention to slide 39... um and then you compare that to what you did in the first half i mean the stores in the first half their ebit was up 3.8 on a normalized basis the story but fell by 0.2 now that means that the store ebit fell in that second half by um or four i got about four and a half percent so the stores really went backwards in terms of ebit now that's You just talked about renewals and that, but you guys spend at least half a billion dollars at least on renewals and upgrades and new stores, and you've been doing that for four years, and yet the stores are going back. Now, what I'm trying to work out is going forward. Now, e-commerce is hitting the cover off the ball. I mean, there's no doubt about that, but your stores are really languishing big time in terms of profit performance. Now, whether it's the leverage, I don't know, but I'm trying to build myself a little bridge. in terms of what your earnings are going to look like in 25, hence the question to you and not to Steve, because I think I'll get more out of you than what I will Steve. And that's all due respect to Steve, of course. But when you look at what your sales growth could be, what your gross profit is likely to be, you have to absorb another $90 to $100 million of implementation costs and your depreciation costs are growing by $100 million a year because of all this capex you've been spending I noticed Australian food EBIT in DNA, DNA went up by over $100 million. And I'm assuming, if you could clarify, that that's going to continue rising by about $100 million. And you called out that labour costs are going to be rising by about 4.5%. Now, if I do a little bridge earnings, I don't think you can grow EBIT in 25% in food unless these productivity initiatives that you call out in 25% really, really bring you home. I think you're struggling to grow EBIT next year, Brad. So can you go through a little bit of that bridge? Because the question is, why is stores EBIT going backwards so bad? Is it because of the depreciation you have to carry? How much is that depreciation going to keep growing? How much this drag on the implementation costs and these productivity initiatives can that bring you home so that you can actually grow profit in supermarkets, excluding e-commerce in 25?

Thanks, David. I don't know if that was a compliment or not, but I'll take it as a positive. So obviously we're not going to talk to the F25 forecast, but let me give you the right colour to F24 so that you can, of course, and you'll work through your own modelling. Q3 was just challenging for us, and I think everyone would know and understand this, whether it was The fact we were cycling a collectible last year, not having one this year, the issues we had on on-shelf availability, the challenges we had around Australia Day, the rest of the negative media around supermarkets. So it was just an incredibly challenging quarter for us in every possible way. And you see that reflected in the results as well as our commitment to actually invest in our customers and really do the right thing for our customers. And so it is really, as I mentioned in my intro, it was a year of four quarters. As you get to Easter, you start seeing a very different momentum come back into the business. And of course, our goal is to build on that in F25. And the nice thing in retail, as we all know, is you get to cycle things. And so you cycle high performance at times and you cycle opportunities at other ends. cycle in the year ahead, including as I talk now, we're sort of two weeks later into our current collectible program, and you don't really see that in our first eight weeks, which is something that we hope you're very excited about as a group collectible. So first point is that's the issue, David. It's an incredibly challenging two, three, and possibly every respect. Including earlier in the quarter, I've been very diligent on price establishment to make sure that we were following what we had guidelines for ourselves on making sure we have efficacy on prices before we promote off those and so it took us a few weeks just as we come out of the key Christmas period to really do price establishment and as I say that we've moved the index very quickly into where we are now. Second point David and I know we break it in the two ways but we do combine it for a reason between e-commerce and stores and that is that 89% of our e-commerce business is picked in a store. a change in shape of the store, even though we'll report both channels. And so you do need to look at the numbers together. And one of our big initiatives in our format is redesigning the store to make it more and more e-commerce friendly. We've split the docks now, so we don't use the same dock for an inbound. As for an outbound, the docks are split. We try and do drives wherever we can. The whole deeper shelves, spacing between files, you name it. ESL, by the way, is a critically enabler for e-commerce, amongst many other things. You've got to look at both of those when you look at leverage of the store. One of our biggest opportunities, and we delivered a lot of it in Q4, but it is going to be still another opportunity in Q5, is how we continue to improve our pick efficiency in our stores, and how we sequence things, whether we pick for customer or by batch, and all the other tools that Amanda can talk to, and how we build the basket. I think you've got to look at them together. And I wouldn't underestimate, and we've had to do this before, when you commission, and we need to build the right volume for when we commission our CFC in Auburn. But actually, the real deleverage is when you move the e-commerce volume out of the store. Our plan is not to move it out. Our plan is to grow it. And as I said, it's becoming much more same day. So I think that gives you some context. Now, when we get to F25, you know, we have to be averse, David, which we are, that we are sitting on a cost base that has gone up by 3.75 plus or half a percent of super, and therefore we simply do need to execute in the right way on our end-to-end productivity plans. Those do include, to Sean's point, ESL, and continuing to grow ESL in our business, albeit with a bigger font, easier to see, a new color, colors, and so on. We do need to execute against our planning in order to achieve the right outcome for our shareholders, right? And we're not saying that that is a walk in the park, quite the opposite. But as I say, there are other things that are going our way. Last but not least, and this, I know, hopefully you are very aware of why we do it, and we do need to change it going forward. In Australian food are also really important adjacency profit generators for us. particular cartology, and we will be considering how we report it going forward. So we do need our adjacencies to deliver to help us deliver the overall result for Australian food. They did deliver for us actually in F24, but we really do need them to continue to grow and deliver for us in F25, and that is certainly our plan. The major one I called out is media, but it's not the only one sitting in the adjacencies. Steve, is there anything you wanted to add? I'm tempted for you to add something. No, you don't want to add anything. Thanks, David.

Thank you. The next question comes from Lisa Deng from Goldman Sachs. Please go ahead.

Hi. Congratulations again, both Brad and Amanda. My question is on the food GP margin. It's seen a very strong growth. I think even in second half, it was up by 54 points or bips. Removing tobacco, that was 37. And then that's due to a range of, you know, I think structural and cyclical factors, like you guys called out next-gen promotion, cartology, cycling collectibles program. Can you kind of... maybe to the extent you can give us a little bit of a, you know, build in terms of what's structural and what's cyclical and kind of then we can gauge what we can potentially bring into next year. The one extension of that is cartology, Brad, you just mentioned. It actually was softer than, I guess, run rate at 9%. What was driving that and how do we think about that going forward, thanks?

Let me answer a few pieces, and I'm going to turn to Stephen, who wanted to talk to the previous question, so we'll make him sing for his lunch in a moment, Lisa. Cartology really was a reduction in the number of collectibles we ran during the year. So that materially impacted them, because you really do use them as great sales events. So that was the real issue where I was a bit more muted. Actually, our growth digitally, which is where we want cartology to grow, was very strong. As I say, we're really sold out on video, and just the whole way we're thinking about monetizing digital in particular given the material growth and the number of our customers using our apps. And we don't actually monetize at all right now, by the way, our Everyday Rewards app, which is an incredibly strong growth app for us, so it's a nice opportunity. So that's the quantology story. In terms of the GP Bridge, the only thing I'd add by way of intro to one of my pet topics, Steve, is we always look at GP relative to net sales value. We don't give you the GSV to look at it. And if you looked on the GSV, you don't actually see it going up. And that's because between our GSV and our NSV are our investments in everyday rewards, both in the points, but increasingly material, the everyday extra, the 10% off. So we don't show that to you, but that is quite an important component when we look at it. We, by the way, believe it is driving value for us, and we can talk about that separately. with close to half a million people now using everyday extra, but that's one of the issues sitting in the background. But in terms of the rest of the bridge... Thank you.

And, Lisa, hopefully you're happy to talk to me. And, David, I'm looking forward to seeing you later in the roadshow. We'll talk then. But in terms of the bridge, about... Yes, as you rightly pointed out, we get this 20 basis point tail. We need a basis point sense from tobacco declining, but actually we make less GP. So tobacco going backwards by 21% in the second half doesn't actually help our earnings. It just inflates the GP percentage calculation. So the 37 basis points, what I call out is a couple of them are cycling. So we cycle to collectibles. That's probably worth about, you know, 8 to 10 basis points. Actually, strong growth in our adjacencies, both cartology but even rewards, everyday mobile, everyday insurance businesses, WPAY, all actually had quite strong growth, so similar type of basis points improvement to that cycling benefit. And the balance is a range of things, and they're consistent with what we've talked about in the past, We continue to leverage our analytics tools developed by WIC to optimise our promotions. We're working hard on commodity sourcing, our own brand teams trying to get actually the best value for our customers, so improvements in sourcing. And then some mixed benefits, so long life is a higher margin part of the store for us than fresh, long life through faster than fresh. So I think the combination of those makes up the balance, but I think it's important to always reference back to our price settings. We are... Very competitive on price versus both Coles and LDR indexes. They're in good shape, and I'm repeating what Brad said earlier, but, you know, we always start with making sure that the price settings are right and we've got compelling value offers for our customers. And so, you know, growing margin with things that we can control that don't impact the customer is really what we're focusing on. And so those would be the sort of key components. Probably the only other thing to talk about would be stock loss. We've obviously spent a lot of time and energy on rolling out things like scan assist and our welcome gates. We think it was well managed. It went back marginally, but not material to talk about. But actually in the current macro environment, we actually think that's not a bad outcome. So those would be the key points, Lisa. Thanks, Lisa.

Thank you. The next question comes from Brian Raymond from J.P. Morgan. Please go ahead.

Good morning. Mine's on the – maybe a bit of a follow-on from Sean, actually, just on the in-store execution piece. I've been getting similar feedback around maybe a little bit of a drop-off from a very high store standard in terms of on-shelf availability, promotional compliance, et cetera. And I'm just sort of unpicking the numbers before the disclosure changes potentially next year around cash CODB growth. And it was a good cost control period for you guys. Adjusting for the 53rd week, it looks like about a 4.5% growth rate on cash territory in the second half. I just want to understand a little bit of the drivers around that in terms of labour in store in particular, because supply feedback has been more that, you know, diet slots back to normal. It's really about in-store labour. I just want to understand where you're at on in-store labour. Are you happy with the execution you've got at the moment? Or is that part of the solution, is getting a bit more people in store to get products themselves? Thanks.

Brian, I will report from the call phase in three weeks' time when I work in store, so you can expect another misser from me. But on a more serious note, we are very committed to our labour forecast in our allocation tool, IT3, and we give the right hours to the store based on the number of items that we sell that we expect to move in the store, and that's key to us, and not compromising that is essential so that our team get the right hours and therefore we move trust and resonance with the team. And our voice of team scores actually went up during the year, which is just a testament to the hard work the team has done. We've also, in that context, launched a new routine, My Customer First Availability, which just does tailor how we move our product from the back of dock to the shelf in the store, so we get the right processes into the store. It certainly hasn't been through our shortcutting. That's not the way we do things. It doesn't mean we don't have material productivity plans, but that's not what happened. As I said, there have been a series of frustrating events during the second half in particular, starting with the SAP UDF rollout and then CrowdStrike, and we had an Azure issue and so on. There have been a series of quite frustrating events, never mind the weather issues we've had with the rail outage for three weeks into WA and so on, so there's no question. What we've now started to do, though, as we go forward, Brian, is we are very focused on making sure that we have a new reporting suite, so we don't only know our store service level at the back, you know, whether the product's in the store, but we're actually now using WIC to redo all of our shelf tools, so we actually do on-shelf forecasting as well, so we can see the gap between it's in the store and it's not on the shelf, and we're working very hard to close that gap, which will be a major opportunity for us going forward. And then we've also had a few longer-term unsupplies, particularly in our own brands, that we really are very focused on making sure we address. So there's no good reason for it, to be honest, and everything we've seen from our team is they're really very focused and pumped up on taking advantage of this opportunity, quite frankly. It's not a negative, it's just an opportunity for us as a collective. And as I say, if you believe, which I do, that our power lines, our top 250 lines are running on-shelf availability of 89% right now, improving by the week, but if you believe that we could close that to a 95, you could get very positive on sales, depending on what assumption you place on cannibalization. You're certainly not... experience. I don't know, Paul, if there's anything you wanted to add in the commercial?

I would say that the work that's happening between the commercial team and the ops team and replenishment around just the prior planning as we go into each trading cycle and backing ourselves on pushing extra stock of the right things into a store in a very manageable way is good opportunities for teams working together to actually lift the mentors as well.

One other thing I should add actually to this, and I forgot as I was talking, is the issue that we really need to unpick, and as I said to David, it is great virtue for us to use e-commerce off the store because then we're really good to leverage the asset in very powerful ways in particular. So when you do the same day or sub two hour deliveries. But by the nature of it, we now have our peak trading period on a Sunday afternoon which is quite challenging and because we need to really manage that. And so we're getting much more thoughtful. Sunday-based e-commerce growth is, I think it's 17% of our e-commerce businesses are Sunday afternoon. And so we're trying to really rebalance the load on Sunday afternoons for e-commerce so that we can take some pressure off the shelf on a Sunday, which is a hard day. And the problem is if you're out of stock on a Sunday, it really does impact you on a Monday just by the nature of the change of the week. That's another area that we are working on that has caused our success in the same day, in particular Sundays, has caused us an unintended consequence on shelf availability.

Thank you. The next question comes from Craig Wolford from MST Marquis. Please go ahead.

Good morning, Brad and team. Great to see the small improvement in scales and a continuation of that momentum. But I am intrigued with the nexus between what's happening on price versus volume if i looked at the um disclosure you have on comparable items growth it was only 0.4 percent in the fourth quarter and you're in your deflation is 0.6 overall or 1.4 excluding tobacco and fruit and veg so it just feels like you're getting some volume uplift, but you're seeing a bigger price decline and the net of that is negative. And I just wonder, you know, we also see bricks and mortar going backwards versus online going forwards. It just doesn't feel like the balance is necessarily net additive for the overall food division sales.

Thanks, Craig. I mean, you're looking at average numbers for the quarter, if you don't mind me saying, and we're looking at, you know, daily, weekly, monthly, monthly trend line. So just quite an important distinction. But to your point, we are very focused on basket size because our issue is not visitation from customers, whether digitally or physically. Our visitation is up, we just need to make sure that our customers build a great value basket every time they shop with us and we maximize that basket. Where we are losing a few items in the basket is in the physical store, so it's a huge area of focus that Paula and Amanda can certainly talk to to hold that. That said, Our focus, as we said, performance is on the basket. And when you look at our volume share, our volume share is not looking too bad as we track it, and there's a lot of noise in all of these. And that is key to us. We need to hold the basket with the customer, and if we need to invest a little bit more in price, which you see in the deflation, that's money well spent, in particular as we see customers trading down, Craig, in our business. And they're trading down inside Caviar, so they're trading down in slightly different ways whether it's a double bay or an east garden switch or so on. So we are very focused on that, and we are seeing volume share look pretty good and to be growing, and that is the basis on which we want to build our business. And if we have to invest in price through promo or trading down for a customer in the category, that is an investment well made for the future.

Thank you. The next question comes from Ben Gilbert from Jarden. Please go ahead.

Hi, good morning, all. Just to thank for everything you've done for all these brands and congratulations. But maybe now sort of looking to your legacy as you move on and maybe one for Amanda. Just you talked to how Brad's been a great steward for customers and for staff. Just in terms of your focus to some of the early questions as well, just around trying to work the asset base harder as you come in, because one of the criticisms around Wally's over the last 12, 18 months is you probably haven't worked the business as hard as maybe your friends down south have. And it feels to me that on the call today, you're talking up progressively improving trends through the month and whichever collectibles didn't look a bit better, but Are you going to take a bit more approach trying to work a bit harder, be a bit clearer around the message and maybe trade the business harder on a shorter-term lens as well as trying to get some of the benefits of the significant capex that's been put into the business? Just kind of any thoughts around that.

Ben, let me start and give it to Amanda. I don't think we're not avert that we've had enormous distractions in the last year, so let me just agree with that. My legacy or the legacy of anyone I've always seen is to find what happens after you go, not what happens while you're there. And so to me, I should be judged as we all should be judged by what happens in the next couple of years, and not by what's happened in the last couple of years. But I'll let Amanda talk very specifically to your plan for F25.

Yeah, great. Thanks, Brad. And Ben, we're very focused, as I've said in the presentation, on continuing to follow on that legacy, as you say, and put customers first. and continue to get it right for customers, and we recognize that there's been opportunities over the last six months where we could have improved. As we've looked at the go forward plans, we're incredibly excited about the strength of our trade plans, the sales plans, and our teams are really actually excited about the next couple of months that lead into Christmas, the opportunity to trade the business, and we're very focused on how do we continue to help our customers find more value, Improve availability, as we've talked about, and Brad's already talked to a number of the initiatives that we've already had underway and that we're seeing improving momentum around, particularly on those power lines and those big lines and own brand that we know our customers are looking for. And then really continuing to improve service as well, as we look at our e-commerce business, such great opportunities to continue to grow there. When we're looking at then the broader business outside of our retail group, there is this still immense opportunity to continue to grow our adjacencies and our platform businesses. And so, you know, I think there's already a lot in play there and what we're focused on is how do we unleash the full potential that already sits within the business. You know, we sort of talk about it here as a leadership team. We've got all of the building blocks already in play and so it's about us really focusing on that delivery And then, you know, we are a very large business, as you know, and so how can we continue to seek ways to just make it simpler for our team to have more impact? So I feel really positive about the future of Woolies. We are going to be very focused, though, and bring it very much back to what is the right thing to be doing for customers? How do we really get into our trade plans and get excited about them? And we are. And how do we continue to make sure that we're there for our team as well? Thanks.

Thanks. The next question comes from Richard Barwick from CLSA. Please go ahead.

Good morning, Tim. I want to talk about New Zealand. I think a disappointing result through this year, certainly relative to market expectations as well. I think, Brad, you made a comment that it would take a few years for the New Zealand business to be able to achieve its potential. I'd love to hear your thoughts, or Amanda probably more importantly so, as to what do you see as the potential? How do we define that? Because if we use history as a guide, then you would be looking at sort of low 300s, millions of dollars in NZ dollars for the business, or are you more optimistic than that? Just would love to try and scope that out a little bit, please.

Richard? Let me talk to the transformation, and we don't do profit forecasts anyway, as Mr. Harrison is pointing out to me as we speak. I won't put Amanda in one of her first tough questions on that issue. But, you know, clearly we need to, and our whole strategy as a group is to build platforms that we use and we leverage across the group and no more obvious places between Woolworths Supermarkets in New Zealand and Woolworths Supermarkets in Australia. And one of the reasons for rebranding Countdown to Woolworths was our ability to really start doing the leverage in one card to everyday rewards. And we've actually collapsed the franchise business in New Zealand into one franchise business called Fresh Choice. So leveraging the platforms, they're not the same. Basically everything we're doing is now being replicated and they're good learnings both ways in doing that. And that's the key for us to succeed in New Zealand. early stages are very promising. When you just look at the simple math of what happened to the profit results, it was a 12% wage increase and then another 7% and it was 19% and we didn't get that back in pricing in a market with an incredibly challenged consumer in the market and a very robust competitor, particularly in the form of back and save. So in a very simplistic sense, that's what you saw happened and there's very good reasons for it. As I say, the rebranding does give us the ability to access and leverage the full group across that, and as I say, we are starting to see some really pleasing activations on that. If you look at everyday awards in New Zealand, for example, never mind the 450,000 people who joined the program, which is material in the context of a small country like New Zealand, but Clive Island has stated publicly their intent to pull out. We've signed four really good new partners to the program, two new exciting ones coming in November, December. and you can see how we started to get that leverage, and we're running every day awards on both sides of the Tasman, same app on both sides of the Tasman, one app spend. If you look at New Zealand, one of the biggest opportunities in New Zealand is our lack of digital traction. In Australia, we have a material digital traction. Digital traction is ahead of our store traction. It's way the opposite of New Zealand, and so the way we do that is through leveraging these platforms. You will get the same. and there'll be good ideas from both sides of the Tasman as well as the same Everyday Rewards Act which is now there and so on. So that is the key. It's one business, it's a trans-Tasman business. It's treated as such albeit with slightly different pricing algorithms in the context of the market conditions we operate in New Zealand given the franchises price differently. And that's how you get the leverage. And there's no question in doing that that we will see an improved sales result. How much we see will depend on the economy as much as anything else. But that really is the plan in a nutshell. Early days, as I said, we are finding it very pleasing. Woolworths was a brand in New Zealand in 1929, and guess what? When we put the word Woolworths back on the store, we get an extra one set of sales. Highly surprising relative to a no-name brand that had no resonance for us in New Zealand. So those factors are starting to pull through. And I'd encourage you when you go on your next trip to New Zealand, maybe you'll go down to Queenstown, Go to our store and use your everyday rewards cards and you'll get points that you can redeem in Australia. So that's really the plan. We are now about 15 months in. And what's nice is you can see all the green shoots in the plan to be back in item growth. It's valuable. The basket opportunities, more material there. Not only do we have the independents, but we've also had warehouse group, chemist warehouse and many others competing for the grocery basket. But actually we're starting to see It's still very robust, but with the deflation we're starting to see come through, we're starting to see a more stable operating environment. We remain positive in some of the costs that we incurred in F24. We will be taking that as we annualize in F25, so that will give us a little bit of a head start as well. Steve, if you'll please add, we don't really want to get into a forecast, but There's reason for optimism in the mid-term.

Yeah, I mean, ultimately, getting our price settings right, our competitiveness in the eyes of the customer so that we get more sales is the key, right? And so, actually, we've got a strong productivity program in New Zealand. You know, they did a reasonable job of productivity in 24, and they got a strong pipeline in 25. But ultimately, we need to continue to build that momentum. So seeing those better sales results when we rebrand from Countdown to Woolworths seeing the improvement in items, actually getting e-commerce back into growth, which we've seen, you know, particularly over the second half, are all reasons for optimism.

The only negative I would add, Richard, is, you know, it's a negative but a positive in terms of what it means for our team. Underlying wage growth is, of course, the same challenge we have in New Zealand, despite the 19% I've talked to that we have in Australia. So, you know, we really need to engage constructively with the unions over there on that. and just get the right trade-off in terms of some of the constraints in actually delivering productivity given the enterprise agreement we have.

Thank you. The next question comes from Phil Kimber from E&P Capital. Please go ahead.

Hi, guys. My question is just that sentence in the release where you're considering the removal of gross profit and CODB at the segment level. I mean, I guess as a long-term observer of Woolies, you've been an industry leader in terms of financial disclosure, and this seems like going a step backwards. So I just wanted to explore that from your point of view more. I get that it's more complicated now with the way, you know, the business is evolving, but, you know, I would argue it's still very important to understand the differences between sort of how the operations of the business, the store, the rent is growing versus, you know, how the trading part of the business, the buying, the merchandising is performing. So just be interested in your thoughts. Thanks.

Yeah, Phil, we'd like you to challenge our competitors to provide some of the transparency we provide. So, you know, keep the questions up for all of us. You know, the issue we've got, Che, is just the efficacy of really what is GP versus CODB and now really the efficacy, you know, goes down to where you put your your media money, and so to speak, in which line do you put it into cost? Do you put it into GP? And so there's issues there. And then very importantly for us, really, we're trying to be a lot more forensic on the end-to-end cost of running the different broad businesses, say, inside a supermarket. You know, there's been a lot of conversation on meat and do we make money or not make money on meat, and you start looking at GPs and so on. When you actually look at a contribution margin, which just assigns the right costs all the way through, essentially you find a business that is at breakeven or modestly profitable in the last year, but you end up with a very emotive conversation around the wrong data, and there's a risk inside our business if we use that data to make also suboptimal decisions. So we really want to enhance reporting, and Steve can talk to what we want to do there with some of the segments or retail media we want to show, But we also want to move to a more accurate measure of the underlying profitability of our business, which in the characteristics we have is going to be looking at contribution margin, which is a variant of what we've done with DAP. But I'll, Steve, let you go through the details. The only other point I'd make is we're not going to lose CODB or GP at the group level. So you're always going to have that. So we're not trying to dodge an issue. We're just trying to get the right mechanics as we look at our individual businesses.

Yeah, Brad, I'll just make some sort of additional comments. What we're trying to do is make sure decision-making at Woolworths has an end-to-end lens. So when you just focus on the margin or just focus on the cost, it ignores the interrelationships that exist. And so actually we want our focus to be on the sales, the cost of goods, the cost through the supply chain and the cost in our stores. And when we actually look at the category dynamics within our business... The economic remarks will be different depending on which part of the store or which of the products. Some of our production or service areas might have a very high gross margin but actually got a high cost to produce and a high cost to serve in the store. Just focusing on one area and not the other, we don't think it's a full end-to-end view. Increasingly, what we want to do is... provide commentary around the category economics into the color on the performance of each of the parts of the business. So that's what's behind it. And it links to actually how we're managing the business internally. We're really focusing on how do we look at contribution end-to-end and profitability end-to-end and want our external disclosures to match how we run the business.

It was, we just this month in our board report actually reported contribution margin by a broad area in all of our businesses and it was a very powerful conversation at the board on decisions and how to make the right decisions. It is clearly going to influence our decision making going forward.

Thank you. The next question comes from Michael Simotas from Jefferies. Please go ahead.

Hi everyone and good luck with the future, Brad. I've always enjoyed our interactions. My question, I guess, is a little bit more of a philosophical one. It's good to see improving sales momentum in the business, but sales growth is still well below a historical long run average. And it's partly because you've been lagging competitors, but partly because the supermarket industry is quite subdued. How much of that do you think is cyclical consumption versus perhaps more structural leakage into other channels and retailers because I appreciate the consumer is under pressure but some of the more discretionary retailers continue to do quite well and I would have thought population growth as well as some trading into the store should be providing some of an offset so just interested in any comments on that please.

Yeah, I think it's – and I'll make some comments and ask Amanda to do likewise. Michael, I'm sorry I'm not going to be there when we open the new store in Belmain, and I'm hoping that if you store it there, you'll enjoy it and shop it. I look forward to you building a very large basket, including all those everyday needs categories, which is where we've seen the unit loss. And what we've essentially seen, particularly in everyday needs, is a lot of other retailers, even discretionary retailers, coming into the space so that they can build their own traffic to their stores and therefore you see very high levels of discounting in these categories across a whole range of retailers depending on the nature of the item. And I'm sitting here next to Dan Hacker who runs a big W business and I would include big W as one of these who of course is aggressively and naturally competing in this everyday needs space. So you are seeing that part of the basket get shared between many retailers That's good for competition, it's good for consumers. And that's even more pronounced, funnily enough, in New Zealand, Michael, and that's one of the challenges you see in our New Zealand results. So our challenge then comes back to how do we get those items back into Woolworths, and we simply need to work hard to get the right price, the right cost per unit, and to do that. If we do, what we know in our history is there's a lot of convenience in doing your shopping in one place. and not splitting your basket, but it's all based on getting right price and getting that clearly communicated, and then convenience wins. But the first two are disproportionately important right now, and I think you can rebuild the basket. It was perhaps over-egged in COVID where some people deliberately put one place over many places, but there's no reason why through convenience you can't build it going forward.

Yeah, thanks. Thanks, Brad. I'd just build on that by saying that Yes, there is that change in customer behaviour that we've seen particularly over the last six months quite acutely and going forward when we're thinking about cost of living pressures. What I think is a real positive for Woolworths is the fact that when you look at our convenience offers like online, shopping direct to boot, you're really seeing the basket sizes increase over time and as we know and as we've talked about before, you really have that customer who increases their overall spend with us. So they're shopping in our thing for direct to boot or delivery and overall they end up connecting with us more frequently. It enables us to be able to connect our supply partners to them as well as they're connecting on our digital assets we're also able to then continue to better understand what they're looking for. And, of course, through that, we are able to also grow that basket over time. So I think, you know, that's how we're thinking about the future. Certainly, everyday rewards plays a really important part of that, as does our real approach in terms of thinking about being where the customer is. So I think we're well-placed, but we're certainly seeing some shift.

I think your point on the basket size and e-commerce is very powerful. Thanks, Michael.

Thank you. The next question comes from Nicole Penny from Rumour Equity Research. Please go ahead.

Good afternoon. Thank you for taking my question. Just following on the previous question on Australian groceries, Endpoint 24 was a year where many of the Woolworths grocery key supply chain advanced data analytics investment and loyalty investment and initiatives were meant to come together. And understanding the plans are there, But some of the initiatives, the response to digital data analytics and store initiatives are taking longer to roll out relatively. With the benefit of hindsight, Amanda, are there any critical gaps in competitive response times or internal reporting structures, execution and implementation times that you've noted? And could you please comment if there are any areas for improvement in the coming years, please?

Yeah, thank you. Thanks for the question, Nicole. I would just say, and I'll echo what we've talked about before, which is at the beginning of the second half we did see a real shift in customer behaviour and I think we've talked about the fact that we could have improved in terms of our response early on in the second half. What I would say in terms of what we're seeing from customers though is those customers who are really engaged with us across our stores, online, and digital, and our loyalty programs. They continue to actually connect with us more frequently, show their loyalty in spending more with us. The opportunity that we've got on the go forward is to have broader appeal across our customers who perhaps aren't as digitally engaged with us as some of the cohort I just talked to before. So that's a real opportunity for us is to continue to grow where we see customers engaged in digital, in e-commerce, and in loyalty. We see real upside, both in terms of their experience that they have with us, so the NPS and the advocacy, but also the spend that ultimately comes back to us as a group. The opportunity is for those who perhaps have our everyday rewards card but aren't boosting, for example, are shopping our stores but not scanning, and that's what we're very focused on in the go forward.

Thanks, Nicole.

Thank you. The next question comes from Ross Curran from Macquarie. Please go ahead.

Hi, team. It's Ross. Appreciate you taking the question. I guess just to round it to Richard's question before, Big W is another division that's sort of well below peak levels of earnings, earnings down 90% this year. This division consistently lost money pre-COVID. How should we think about Big W going forward? Is it a break-even business at best going forward, or can it get back to being a meaningful contributor to the group?

Thanks, Ross, and that's a lucky last question, actually, and I'm sitting next to Dan Haake, who can talk to the business. Obviously, at a high level, our plan is not to be break-even. Our plan is to be profit-accretive and contribute to the broader group as we are doing through awards, as Amanda's talked to, or digital engagements, or In fact, we're running our first group collectibles program right now inside Big W, Woolworths Supermarket in Australia, Woolworths Supermarket in New Zealand in the early days, but it does appear to be beginning traction. Dan, I'll let you talk to some of the things that are underway right now in the group. I think very importantly for us is we actually finished the year in June with actually making money, right? So it's not like we, and normally we only make it at the end of the year, so I take that as a very positive sign in the year ahead. Maybe just some of the specifics versus the guidance, Dan.

Thanks, Brad. And I do think we need to take PW's performance in context of the wider market as well and just the pain that a lot of our customers have gone through in context of cost of living. And a lot of what you see in the results is that change in behavior playing out. Now, two priorities we had as a team in F24 was really making sure we responded on value, and we were there on pricing and compliance. competitiveness overall, which meant prices dropped in over 3,000 lines and making sure we had the right promotional and event calendar in place. And we worked on covering any opening price point gaps that we might have that are incredibly important for our budget families in particular. So really what you see in F24 is that discretionary pullback in our core customer cohort. Now, the second priority was keeping track on our transformation priorities and making sure we build a sustainable and profitable business for the medium term. And maybe a few call-outs there. One, working on product. And in each of our four businesses, we've made a significant headway. So if I talk about our everyday segment, our bulk range extensions and our beauty offer in particular have worked incredibly well, including our shop-and-shops segment. In our play business, which is our strongest market share business, we've gone hard on launching own brand offers through our brand Somersault and Toys. Stationery are all off to an incredible start. We have just gone live, and I think it's important to note that in clothing and home, those are longer lead time businesses. It takes a good 12 to 18 months to reset. The range is there, and F24 has not benefited yet. option reduction, a significant part of the range of $20, all of which should lead to volume growth and improved performance and lower clearance investments. So clothing at home are really in that bucket. So I think just a lot of work underway. If you want to talk about green shoots, actually, from those changes that we've made, one, units and transactions are back in growth through the end of Q4 and the first eight weeks of trade. Our e-com GMV, which is The total dollars through the till on our online site is up 6% for the year, but that's only been in place since November, so we're seeing double-digit growth through the back end of the year there. And then just the whole system transition that we've been through, both on space management, smart clearance, and the like, are only just launched, so we're going to see the benefits of those going forward. We're quite, I think, quietly optimistic about Big W's potential, and yeah, we have an experienced executive team who's working incredibly hard to build a sustainable customer franchise, so we're feeling positive overall.

Thanks, Dan, and I think that was our last question. As I said on the media call, the truth is always in our stores, so get into our stores. I think, hopefully, Sean, if you go down, travel later in New York, in Lane Cove, sorry, I was going to say Crow's Nest, you will see much better availability than you thought, and we urge you to go there, see our new price ticketing, see our on-shelf availability, see the way we tie up our promotional ends, including actively promoting some of our everyday needs categories, and hopefully you will feel as positive as we do, and in fact, new trolleys in Lane Cove. Thank you, Amanda. So you can also get to use our new scan and go trolley, and why not? Thank you, everyone.