Woolworths Holdings Ltd

Thank you for standing by and welcome to Woolworths Group F25 Q3 sales announcement. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. 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 Ms. Amanda Bardwell, Managing Director and CEO of Woolworths Group. Please go ahead.

Good morning, everyone. Thank you for joining us today for Woolworths Group's third quarter sales results for the 2025 financial year. I would like to start by acknowledging the traditional custodians of the land on which we meet today, Dharong Country, and I pay my respects to elders past and present. Joining me this morning are Stephen Harrison, our Chief Financial Officer, Annette Carantoni, our new Managing Director of Woolworths Retail, Paul Harker, Chief Commercial Officer, Australian Food, Sally Copeland in her capacity as Managing Director of Group E-Commerce X, Peter DeWitt, Interim Managing Director of Woolworth, New Zealand, Von Ingram, Managing Director of W Living, and Dan Haig, Managing Director of Big W. The group's performance in the quarter reflects a continuation of trends from the first seven weeks with solid sales growth within the context of the challenging environments. Weather events in the quarter caused some isolated supply chain disruptions for our stores, and we temporarily closed and paused e-commerce services for team and customer safety. However, we worked hard to support affected communities across Queensland and northern New South Wales. This included the donation of groceries and essential items to evacuation centres, as well as airlifting essential items to Ingham and other communities isolated by floodwaters in partnership with the federal government and the Australian Defence Force. These events have led to additional costs of 20 to 25 million related to higher stock loss, incremental transportation costs and damage to the Harvey Bay store. I would like to recognise the incredible group-wide efforts of our team who supported their communities under difficult circumstances with many of them also personally impacted. Customer metrics remained largely stable in the quarter with group voice of customer NPS of 44 flat on quarter two and up one point compared to the prior year. While it was pleasing to see a stabilisation, we know we have more to do to provide consistently good shopping experiences for our customers and deliver the value they expect from us. Now turning to performance by business. In Australian food, total sales increased 3.6% to 13 billion, supported by strong customer trade events and solid e-commerce growth. Sales were predominantly driven by transaction growth, with items per basket up modestly. Woolworths food retail total sales increased 3.4%, with e-commerce momentum remaining strong at 16.3%, albeit at a slightly lower rate largely due to the impact of weather events. The change in timing of Easter modestly impacted growth rates in the quarter, with Woolworth's food retail Easter-adjusted sales growth of 3.6%. Woolworth's supermarket store-originated sales increased 1.4% compared to the prior year and benefited from temporarily disrupted e-commerce services in the period, which saw more customers shop in-store, particularly in Queensland. Customers remain value conscious and continue to cross shop, with customers continuing to look for bigger savings through deeper promotions and own brand. Woolworths Food Company own brand and exclusive brand sales continue to outperform in the quarter, growing 5.7%, with particularly strong growth in pantry essentials, frozen foods, snacking and household care. Average prices, excluding tobacco, in quarter three were down 0.5%, marking the fifth quarter of low prices for customers driven by deflation in long-life categories such as pantry, snacking, freezer and everyday needs. Fruit and vegetable inflation in the quarter was due to cycling a period of abundant supply in the prior year and meat prices continued to be impacted by rising costs. Same-day and on-demand propositions fulfilled by our store network continue to resonate strongly with 31% of e-commerce orders fulfilled within two hours of order placement and 55% of orders fulfilled on the same day. Cartology revenue grew by 29.1%, driven by the successful execution of the Minecraft Qubies collectibles program across Australia and New Zealand supermarkets and Big W. Rewards and services revenue increased 10.4% and member engagement remained strong with more than 600,000 new active rewards members compared to the prior year. In Australian B2B, sales increased by 6.3% driven by solid momentum in PFD, export meat and growth in the group's third party supply chain business. Sales momentum in New Zealand continued to improve in the quarter, with total sales increasing 4.8% or 4.4% on an Easter-adjusted basis. Sales growth was also supported by the successful Minecraft Qubies collectible program and strong e-commerce growth. We're continuing to see progress from our transportation initiative and transformation initiatives, which is reflected in our improved customer scores across all metrics, particularly in key focus areas of fruit and vegetable box and availability box. E-commerce sales grew by 24.3% and penetration reached 14.8% in the quarter, supported by the expansion of convenient same-day propositions including delivery now and milk run. Our on-demand services are resonating strongly with 23% of e-commerce orders now fulfilled within two hours and 89% of orders fulfilled within 24 hours. During the quarter, we marked the one-year anniversary of the Everyday Rewards program in New Zealand and we're pleased with the engagement we're seeing with our customers with 2.1 million active members at the end of the quarter. Over two-thirds of our stores have now been rebranded to Woolworths and we're on track to complete the rebranding of the entire network by the end of calendar 2025. In W Living, sales decreased 2.7% in quarter three, largely reflecting the timing of Easter, impacting Big W sales in the quarter, and the impact of divestment of 41 pet stock retail stores and 25 vet clinics, which were still owned in the prior year. In Big W, Sales trends improved in the quarter, with sales increasing 1.9% on an Easter-adjusted basis, and item growth in clothing, home, and play. Clothing sales were driven by spring-summer clearance activity, with a slower start to autumn-winter, which has continued into April. This has impacted Big W's profit outlook, with the loss before interest and tax for H2 now expected to be approximately 70 million. Excluding the impact of divested stores, pet stock sales increased 4.5% driven by item growth, strong own brand performance and the opening of three net new stores in the quarter. Woolworth Market Plus GMV increased 24.6% compared to the prior year, driven by the W market, partially offset by a decline in MyDeal GMV with solid item and transaction growth driven by strong growth in returning customers. With only two months until the end of the financial year, we remain focused on the priorities set out in February. This includes ensuring we're getting it right for our customers by improving our retail fundamentals across key areas of value, availability and range, simplifying the way we work to deliver greater efficiencies and unlocking the full potential of the group for our shareholders. We're making progress in these areas and will provide a more detailed update at our full year results in August. We have very strong foundations in place and need to continue to build on our strengths. I remain confident in our plans and optimistic about the opportunities ahead of us. I'll now turn the call over to the operator for questions. To give everyone a chance, can I please ask that you limit it to one question per person and then rejoin the queue with any follow-up questions. Thank you.

Thank you. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star 2. If you're on a speakerphone, please pick up the handset to ask your question. We ask today that you please limit to one question per person. If you would like to ask a further question, you may press star 1 again to rejoin the queue. Your first question comes from Michael Simotas with Jefferies. Please go ahead.

Good morning. So clearly the Minecraft collectibles campaign was very successful. You've referenced it a couple of times. We can see it in the cartology income as well. Can you give us a little bit of colour on how things tracked once the program came to an end in mid-March and not expecting a number but just some comments on how you traded through Easter noting that there does seem to be a lot of confectionery left over this year?

Yes, thanks Michael for that question. I think it's important when we're looking at the quarter just to recognise that we had in the early part of this quarter for Australian food the early recovery out of the industrial action We then had back to school in which the QBs program was part of that and certainly we were very pleased with the momentum that that built throughout that period. And then as we closed the quarter, again, we're pleased with the consistent momentum that we're seeing across the business. In terms of your question as it relates to, so far, trading in quarter three, I'd just say it's actually really hard for us to be able to talk to the likes of likes because, of course, it's not comparable in terms of Easter. The school holidays are also out of alignment. But broadly speaking, it's been relatively consistent momentum. What I would say is that across quarter three, You know, we're pleased with the overall trade performance that we saw in the business. And that's not just about the QB's collectible program, but I'd say there's a number of events plus just the consistent good value that we had on offer across our Woolworth stores that, you know, resonated with customers. And so, you know, it's solid momentum. We've still got a lot of work to do, as you know, but it's something for us to build on.

Thanks very much.

Your next question comes from Tom Curath with Baron Joey. Please go ahead.

Morning, guys. I just wanted to ask on the Aussie food business where you're at with the stock availability. I saw there were some comments on New Zealand and Big W there that that had improved, but I couldn't see any kind of reference to it in the Aussie business. I can see that the store controllable voice of customer hasn't really improved, but is that an area for improvement? Where are you kind of running at now with availability of stock?

Yeah, thanks, Tom, for the question. Again, it's a difficult quarter because we need to just take into account we had the recovery of the industrial action. We also had, of course, all of the weather impacts as well. But if you take that aside, we're actually pleased when we look at the year-on-year improvement, which sits at about 100 basis points improvement in terms of our outbound stock level. So whilst we don't call it out specifically, it's certainly the case that we're seeing a level of consistency around our availability and then something for us to be able to build upon. So again, more work for us to do, particularly in those lines where we're focused on key specials, our own brand products. Eggs continues to be a well-documented product. challenge as well but overall again I think it's a consistent result, certainly up on last year and more for us to do.

Great, thank you.

Your next question comes from Adrian Leamy with Citi. Please go ahead.

Good morning Amanda and team. I was interested in online and thanks for pointing out the impact of the weather events. And thank you also for giving the splits on delivery versus click and click growth now. So if I look at delivery growth of 13.8% in the quarter, on my estimates, it looks to be down about 300 basis points from the second quarter growth rate. While if you look at delivery for Coles, they've accelerated and that's been helped by the CFC. So I was just wondering if you can see in your everyday rewards data, if you're losing, you know, in particular delivery customers to Coles, in those New South Wales and Victorian areas that are being serviced now by their CFCs? And if so, how are you addressing this, please?

Thanks for the question, Adrian. Look, overall, we're pleased with the momentum that we're seeing in e-commerce. Important, as you say, just to take into account that we did close our e-commerce services in Queensland for a period of at least five days, and that was really about us just making sure that Of course, our team and customers were kept safe during that period, but it was also about ensuring that when customers did place an order, that they were getting the right level of service in terms of the availability of the products in the basket. We wanted to be able to meet those customer expectations. When we look at your question around what's happening in New South Wales and Victoria, What we can see is in certain suburbs and areas, we're continuing to track, obviously, our share. And whilst we're pleased overall with our performance in e-commerce, you can see in some particular suburbs a little bit of impact from competitor activity, nothing that we hadn't expected. And in terms of the stickiness of our customers overall, we're very pleased with the momentum. When it comes to delivery, I think that might just be a reflection of, you know, we've called this out a few times, as you know, we're just seeing such a large increase in customer demand for on-demand services. And so our order volumes and transaction volumes are going incredibly strongly in that space. And so there is just a slight difference there when we're looking at the makeup of the delivery mix, but nothing that would be... concerned about, and as you know, we're equally delighted if customers choose to come to our stores and do a pickup order, because that's actually even better economics for us as well.

Thanks very much.

Your next question comes from Sean Cousins with UBS. Please go ahead.

Thanks. Good morning. Just a question regarding Big W. The second half EBIT loss of $70 million, that's kind of getting back to where you were in the late 2010s when you were losing circa... 70 to over $100 million in the second half. At that time, the company started to think about a plan to cut store numbers to get down to sort of circa 150 stores. And there was also sort of announcements around DC savings there. I'm just curious, what's driving the 70 million loss? Is it just markdowns or are there other things? And more broadly, what are the challenges that Big W is facing? Is it your store network locations and store size? Is it the offer? And what's the plan to get this business better? Because it seems to be a source of ongoing sort of disappointment?

Yeah, thanks for that question, Sean. I think that's right. It is a disappointing result. We're disappointed. I know the team who are working incredibly hard are also equally disappointed and it's not an acceptable position for us to have. I do think there are a whole series of factors here that drive that result. So if I just start with your first, and I will hand to Dan to be able to provide a little bit more colour on this as well, but if we just take the $70 million, the majority of that really is reflecting the underperformance in the clothing business in particular. We called out that spring-summer was, you know, unfortunately a late arrival last year. We didn't see the level of stock flow in the way that we would have liked and so that had resulted and continued into quarter three higher level of markdown and clearance. And as we've come into then the autumn period, clothing range equally has not been selling quite to our expectations, and so we have seen some additional levels of markdown there. There's a little bit of stock loss in that result as well, but they really are the primary drivers of the update that we've provided today. So that if I just come back and talk about Big W before I hand to Dan for any further color. Overall, Big W, when you look at it from a customer perspective, the brand resonates. So it's a top 10 most trusted brand in Australia. The voice of customer scores that we see through Big W continue to be very strong. And so it is a brand that resonates. We've got an ongoing transformation that is underway there. And we've got some areas of the business, in particular areas like the home category, where the team have put in place a transformation around the range, the quality, the price points that are on offer. And we're seeing improving and really encouraging momentum there. The health and beauty range in Big W also resonating well. It is really about clothing that's in particular our biggest concern and our biggest area of focus on the go-forward. When you think about the store network, which was your other question, overall the store network when we look at it on a store-by-store performance basis, virtually all the stores are cash positive. So we don't, you know, we're not in that sort of a conversation at the moment. We want to be focused on how we continue to transform the business. Now, Dan, I've probably answered a lot of that question for Sean. Is there anything else that you would like to add there?

Look, maybe just to say that if you look, our conviction is that to be successful in this market, we've got to be a value-led retailer and we've got to be there on opening price point and our own brand product. and a in-the-middle positioning, while that may work occasionally on a year where you've got a lot of trade-off in the market, in the long run, it's not the right place to be. As we reset the P&L to be a slightly lower ASP, more on-brand debt, there's a lot of pain in that transition, but I would say that if you look beneath the overall sales to specific areas, there's actually lots of positive momentum in pockets. So, you know, Amanda, you mentioned The beauty range is, I think, home is another critical call-up where we've reset, we've simplified the range. We've gone to more home brand and we're really seeing sales, GP units all trend in the right direction. Toys is another good example. And so, you know, overall that gives us a lot of confidence. We just have to do it in more places and continue down that track. And then last but not least, and you were talking about clothing, Amanda, so clothing has probably been the business where, so A, we Definitely didn't get it right this year. We've had the most to learn. There's also some initiatives going on that give us a lot of confidence. We're just in the process of scaling RFID, for example, right, and things that will increase availability and will increase sales in those areas. So, as you said, Amanda, it's a big transformation. We want to be there for customers on value and on product, and we'll be undeterred in executing to that plan.

Fantastic. Thanks, Dane. Thanks, Amanda.

Your next question comes from Lisa Ding with GS. Please go ahead.

Lisa Ding, your line is now live. Please proceed with your question. Your next question comes from David Errington with Bank of America. Please go ahead.

Hey, Amanda. Look, I don't want to be pedantic, and I'm sorry if I come across that way, but just to elaborate on Michael Simotas' question on collectibles and the impact that it had on sales, last year, this time last year, I can remember challenging Brad because it was a pretty tough quarter last year, the third quarter, and Brad actually said that the calculation that Woolworths made It's actually in the transcripts, but it's actually that you calculated that the fact that Woolworths didn't have a collectibles and Coles did was the difference between 2% to 2.5% of sales. Now, this year you had a collectible, a very good one, you know, a very good one with Minecraft. They had Harry Potter, which wasn't that flash, but last year they had Pokemon. So Michael's question actually was, I think it was, what was the impact to sales, the fact that you had a very good collectibles this year and you didn't have one last year? So that gives more of a like of a like. Can you give us that? Because Brad was very, very, very definitive last year. He actually said the difference in sales was calculated to be 2% to 2.5%. Would you be able to help us with that? So what was the impact to sales, the fact that you had your collectibles this year and you didn't have one last year?

Yeah, thanks, David, for that additional question. Look, I can't really comment on Brad's definitive answer there. I think he may have been talking generally. There's no question that collectibles play an important role in encouraging customers to shop with us, encouraging some customers to... switch and spend more and they bring those moments of joy as well for many of our customers and young families which is really important and our teams get behind them and love running them as an event. I don't think it is certainly anything like the numbers you just quoted there, be well and truly less than half of that if not even lower. What I was talking to in Michael's question was just to say Yes, we did call out collectibles. Yes, it was one of the highlights across the quarter but I wouldn't be suggesting that all of the momentum or even the quantum you just shared there is a result of the collectibles program. I think it is a result of slightly improving momentum across availability, our overall execution, trade programs that go beyond just The collectible program, we had some very successful programs when it comes to big brand sales. Personal care had some very successful category promotions as well. In everyday rewards, equally, there was some successful promotions there. What we are seeing is customers, as you know, continue to seek value and to really jump into those trade events and we're continuing to improve every day our execution of those. So, look, sorry I can't provide the specifics there. I would just say in this quarter we've just had, it's nowhere near that in terms of impact in terms of our sales. We're pleased with the event, but, yeah, I couldn't comment further on that, David. Thank you.

Thank you. One more, Bill. I think just some further context on last year's comments. The reference may also affect in that we had a collectible the previous year and no collectible this time around. Sorry, in the third quarter of F24. And so that may give you some further colour to Brad's comments last year.

Yeah, thank you. Brad was just very definitive, that's all. And he did call out two to two and a half, and it's there. And thanks for the colour, but it just confused me a little bit. Yeah, but thanks for clearing it up. Really appreciate it.

Thank you. Your next question comes from Caleb Wheatley with Macquarie. Please go ahead.

Morning, Amanda and team. My question was just on inflation versus volumes in Aussie supermarkets. You've obviously highlighted that focus on value again and on the long life side, but the comp sales are really being driven by volumes at the moment, given that lack of inflation. Can you please talk through how you're thinking about that price versus volume equation and any commentary on the impact of increased emotional uptake is having on that, please?

Yeah, thank you for the question. So what we're seeing when it comes to inflation is really deflation to flat in our grocery categories. As you know, a little bit of inflation coming through in fresh, so it's almost the reverse of what we were talking about a little while ago. That is very much aligned to also seeing increasing transactions and units is particularly driven by promotional activity. And so that pattern that we've talked about before, customers seeking value, looking for those deeper discounts, particularly in the 40% plus range, driving a lot of that activation. What I'm pleased about is the fact that we're executing a little bit better on that front and our performance is flowing through then into increasing transactions as well and into units. Look, I think it's one we continue to watch. We know that we need to be incredibly strong in the centre of store when it comes to groceries, pantries, snacking and the like and we've been pleased with the momentum that we're seeing there. There is an element of deflation as a result but overall we've seen a stabilisation also broadly speaking of our value scores and so that's an important part of that equation.

Great, thank you.

Our next question comes from Ben Gilbert with Jarden. Please go ahead.

Just appreciate, Amanda, it's a sales call, but I'm interested in just any update around the progress on the cost out. It sounds like you've obviously made some pretty big moves already across the group. Just interested in one, just how that's progressing competence and getting that 400 million man rate by the end of the year. And then secondly, just how you're seeing some of your internal voice of staff scores in terms of any potential impacts from an operating standpoint.

Mm-hmm. Yeah, thanks Ben for that question. So look, on the $400 million, we are, as we called out, on track to deliver that and the teams have been putting in a lot of work across the business, keeping in mind this is about taking $400 million out of our above store areas across the entire business and we're being very conscious of the way in which we do that. That is a combination of us really taking a look at how we make it easier and simpler for our teams to do their best work and serve customers. And so that has resulted in a number of operating model changes. And then we're also focused on some of those big cost lines as well. But no, we're very confident that we'll be on track to deliver that. As you would expect, I think it's a good question on voice of team. There has been some impact on voice of team overall. I firstly say that we're actually very pleased with the voice of team scores that we're seeing in our stores. So the momentum there is very strong and improving and I think just given what a busy and challenging quarter it has been yet again, we're really pleased to see our store teams and the leaders that are supporting our teams in stores continue to be able to create an environment that our teams appreciate. When it comes to our support teams, we've announced a number of changes. We've announced that we are looking for people to be back in the office three days a week. And so that's a change that many of our teams are working through. I'm absolutely clear that that will help improve team experience and speed of decision making, will help us be a better business and actually create a better environment for our team. But that's an adjustment. that our teams are working through. And then, of course, you know, whenever you announce some changes, as we have, there's a period where we need to go through change and settlement. But, you know, we're on track and certainly we're focused, as I called out in the earlier calls this morning, on the strategy for the go forward.

Fantastic. Thank you.

Your next question comes from Craig Walford with MST Marquis. Please go ahead.

Good morning, Amanda. I just wanted to ask a question about Big W. You all talked at the half year about assessing the shape of your portfolio, making sure each business has a satisfactory return on funds employed. Given the increased losses to Big W and the soft sales trends that it's still experiencing, what is the process that you're going through in assessing the future of Big W?

Yeah, thanks, Craig. And as we said at the half, we're assessing every business in the group. It's also the time of year where we're looking at our strategies for the next three years and ahead. And so it is the perfect time alongside that to take a really rigorous look at all of our businesses. And that is what we're doing with, I would say, both rigor but also pace. And so all of our businesses, including Big W, are obviously part of part of that review. I've already talked I think to the fact that we're disappointed collectively as a team with the results. We don't think that they are acceptable or meet our shareholders' expectations. We are absolutely aware of that and are working incredibly hard to improve the performance of the business. It is a much longer cycle business than some of our food businesses as well and so I can appreciate that Certainly our shareholders and investors would be frustrated with where we're currently at and I can only just say from a Big W perspective, I know the team are working hard to improve it. We'll come back at the full year, Craig, and provide a further update on where we're up to as it relates to the portfolio review right across the Woolworths Group.

Okay. Thanks, Amanda.

Thanks. Your next question comes from Brian Raymond with J.P. Morgan. Please go ahead.

Morning, Amanda and team. Just on the food business again, just the impact or let's call it maybe the hangover from the industrial action into the three key numbers. I just want to understand how that progressed through the period and how we should think about it into the fourth quarter. Did Victoria in particular lag other states meaningfully? Is there a way we could adjust for that in the like-for-like number, for example, to get a baseline to think about the go-forward impact? Given what you were cycling is quite a low number and you're in line with Coles this period, just keen to understand that profile a bit better. Thanks.

Yeah, thanks. Thanks, Brian. What I would say is it steadily improved across the quarter as we had planned and worked to make sure that that was the case. And so as we came out of January, our numbers improved into February and then they improved again in Victoria across March. We're at the point as a business of saying we're no longer calling out the impacts of industrial action. We can see that in some of our key states, of course, they're highly, highly competitive markets for us, but really we've reached a point now where you'd say I wouldn't be factoring in the impact of industrial action on the go forward. So hopefully that helps. I know I haven't given you specific numbers there, but it's improved and we're no longer factoring that in.

Okay, great. Thank you.

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

Hi. My question was just on page three of the release. You provide some digital metrics for food and everyday digital platforms and the group digital platforms and If I look at the average weekly traffic growth and it's versus PCP, it's really slowed. So they've been running around that sort of 20% for both and now it's in that 3% to 4% range. Is there anything specific to call out there why your web traffic would have slowed so much?

Yeah, thanks for that question, Phil, and you are right. Firstly, I just note that the volume of traffic that we have is huge. When you look at those numbers, you know, $19 million a week across food and every day and $28 million thereabouts for the group itself. What we did do in this quarter is make some adjustments overall to our marketing plans and activation. And I've spoken already about the fact that we had a very strong trade and customer plan in our food business in particular with collectibles, with a number of, you know, big trade events And so we did make some adjustments to the way in which we balance those investments and that has had some impact on traffic. If we look at the traffic to our food business in particular, so I'm talking about our green app, that's been very, very strong traffic, almost a 20% increase there or thereabouts. It really is about everyday rewards and the fact that we did a lot of other promotional activity across food and therefore we didn't have quite as much in everyday rewards and therefore you see the traffic slightly lower than you've seen in previous quarters.

Okay, thanks. So that's sort of temporary by the sound of it.

Yeah, I think we should expect to see that we'll continue to rebalance our overall marketing investments and decisions to just make sure that we've got the right level of customer and member engagement for the returns that we're seeking as well.

Right, thank you.

Your next question comes from Richard Barwick with CLSA. Please go ahead.

Hi, Amanda. I just want to talk about, I guess, the voice of the customer here. as it pertains to price and value, because obviously you're underlying inflation. We actually got deflation at 1.2%. So are you seeing any recognition of that from customers in terms of what they're telling you? And I'd be also interested to hear you, if you could, when you answer that, I think it's interesting if you could sort of give a bit of color around, I would note since the ACCC report was released, the rhetoric from politicians outside of the first day or two after the report, it seems to have died off a little bit. So this sort of supermarket bashing, even though we've been through the election period, has died away. And so I wonder if that also may be contributing to a more positive outcome in the way the shoppers are viewing you, Woolworths and pricing. Mm-hmm.

Yeah, thanks for that question. The voice of customers, you know, is something that we always start with. And so I'd firstly say we are really encouraged by the stability that we're seeing in the voice of customer scores overall. And that relates to a number of different key metrics that we measure. To your point, what we did see this quarter, which again we take some encouragement from, is when we have seen these large media announcements and the like, we haven't seen quite the same dip that we did in previous periods in terms of the voice of customer scores. And so whilst it always does take a little bit of the edge off some of the metrics, we haven't seen it at quite the same degree as we've seen it across certainly calendar 2024. When it comes to value for money, I'll firstly say it is very clear that customers... really are continuing to seek value and they are under pressure when it comes to their household budgets. That is not changing and we're seeing that in terms of every different way that we measure value seeking behaviour and so we're very focused on making sure that we continue to provide that value and improve that experience for customers. We are seeing when it comes to value for money, it being relatively stable. when we're looking at that metric overall. We're very mindful, as we've talked about before, overall our prices are competitive against our main competitors, but there is this ongoing work we need to do around price trust and the perception of relative value. So look, we're encouraged by the voice of team and voice of customer scores, something for us to be able to build on and we're looking to improve that over the quarter ahead.

Okay, so just to make sure I've got that right. So even though you are, like you obviously have invested in price because you're demonstrating that deflation, you're not necessarily seeing any strong recovery in the voice of the customer yet. So you feel like you're on the right path, but it's going to take some time to rebuild that trust.

I think that's a very good, And in any case study that we've looked at, including our own from prior cycles, it will take time to rebuild customer trust. We know that and that's why we're focused on making sure that we are consistently focused on creating great value, really consistently improving the experience. But we know as a team that is going to take time for us to be able to genuinely shift those perceptions.

Okay. All right. That's great. Very clear. Thanks, Amanda.

Your next question comes from Lisa Ding with GS.

Please go ahead. Hi, sorry for dropping off earlier. I have a follow-up question on e-comm for foods. You know, we obviously saw it slow down a little bit in the third quarter. You've explained why, but potentially at Better Economics, the... fourth quarter we're starting to see the CFC for Auburn go live. Can you kind of remind me of what potential capacity or strategies, category push, SKU that we should be expecting to come online? And then can I also confirm that there is no additional implementation or doubling cost that's above what's already been guided for the $70 million in second half on supply chain commissioning?

Yeah, thanks, Lisa, for that question. Firstly, I might just start with your last comment. No, there's no further additional than what we've already shared on supply chain of that $70 million, so that remains consistent. When it comes to e-commerce, and Sally, I might stray to you because I know we're very excited about the launch of the Auburn... Maybe just a few elements that I would just call out and then I'll throw Sally to you to just provide a little bit more colour. The Western Sydney catchment is a huge catchment for us already and we've built a fulfilment centre there because of the demand that we currently have and that we're forecasting for the future and so the Auburn facility will 60,000 orders a week out of that facility when it's at full capacity. I'm particularly excited about the fact that the facility's been built in a very multi-purpose way. So it does enable us to be able to provide, yes, next day delivery, but it also provides on-demand services from that facility, so that speed of under two hour, we will be able to serve out of it. But also we've got a 16-bay facility a pick-up facility attached to the side of it. And in our Western Sydney areas, a lot of customers love coming to do the online order but then actually picking it up themselves. So to be able to provide that is really exciting. Sally, I might just throw to you to talk a little bit more about SKU counts and if there's any other colour that you might want to add in terms of the Auburn facility.

Yeah, thanks, Amanda. Yes, we're incredibly excited next week. First order out. And I think the key thing there is it's going to give us 50% capacity for that Western Sydney catchment, which is incredibly important. And scaling utilization allows us actually to unlock on-demand convenience backs through our store network, where our stores are very much well-served to be able to provide a direct-to-boot service and all of the on-demand that we're seeing our growth coming from as well. So it's very much a network effect from that perspective. We are excited about the ability to support same day. I think 100% of users can go out in 24 hours. And the team have really, through the design and build of that site, have really adapted, as you say, the facility to be able to meet the needs of our customers in a very multifaceted way. It's going to carry about 30,000 SKUs. So we do see a SKU count uplift from the range that we offer through our store network, which is critical. And importantly, you know, improve customer experience. We know through our current manual CSCs we can improve complete order. We can do that even more effectively through this automated facility, help get that complete order, on-time delivery, and actually manage freshness and the cold chain for chilled product more efficiently as well. So a big win for customer experience across the board as well that we're excited by.

So just 50% uplift to Western sales. Sydney capacity, what about total Ecom capacity and the ramp up timeline please?

Sorry, just in terms of for that catchment you mean specifically?

No, I thought you said 50% capacity addition to Western Sydney but what about our total Ecom capacity?

We wouldn't have that specific number to hand and really Lisa when we're looking at our overall business. We're looking at it from a catchment perspective. So it's, you know, that's not a number that we would be looking to. Thanks.

And Rampart?

Rampart Timelife? Yeah, so we... We have announced we're closing our Lidcombe facility and that was a manual safety that allows us to pull through around 15,000 orders a week into the facility. So we start with some really solid volume and then we'll scale through the store network as well as I spoke to that and we're really hoping we will be fully online and really humming by Christmas.

Your next question comes from Michael Simotas with Jefferies. Please go ahead.

I've got a couple more if I can. Thank you. The first one, on the $20 million to $25 million weather-related costs that you've called out, that seems to be a more significant impasse for you than what was described by Coles yesterday. Is there any reason why Woolworths would incur more? I do know you've got more regional stores, or is there something specific that affected your business to a greater degree?

I mean, Michael, I'm not sure we can comment on what our competitors said or did. But from our perspective, we're very focused on supporting that northern New South Wales and Queensland region through this period of disruption. And we invested a lot on additional transport. We did have... 200 of our stores closed for at least 24 hours. We had our e-com services out for over five days. In fact, we have had to close our Harvey Bay store, which is currently in the process of being rebuilt. And so, you know, we have effectively a store write-off embedded in those numbers. And so, yeah, our focus on really ensuring continuity of supply... delivering food and everyday needs into catchments in need was our number one priority and we're very focused on that community contribution and these are the costs attached to that.

Okay. And then the second one, just sort of following on from the conversation around value perception and voice of customer. I just wanted to understand the rationale for removing the 10% everyday extra discount on Big W. consumer reaction across social media seems to have been quite negative, which I guess isn't a surprise. Given the less frequent purchasing through Big W, more discretionary nature, more fragmented industry, I would have thought that could have been a reasonable customer recruitment tool. So I just want to understand the thinking there.

Yeah, thanks Michael. I'll take that question. It really, firstly, we implemented the everyday extra subscription before we had started to really implement the lower opening price point strategy at Big W. And so as we've started, as we talked about earlier this morning, to really look at the Big W business overall and how we improve the performance of the business, we've had to take the balanced up decision around everyday value with good quality product at opening price points and all that the investment that that takes to get right with the over and above value of subscriptions. And so a difficult call to make. Yes, I have seen a lot of the social media coverage and can appreciate customers' disappointment. Importantly, the Big W team will be providing a monthly subscription subscriber reward, if you will, each month, and it will just change. It won't be that consistent 10% off a month. So, yeah, a difficult call to make, but one as we look to overall manage the performance of the business, provide great everyday value every day of the week for Big W. It was just one of the decisions that we've had to take.

Your next question comes from Tom Carrath with Baron Joey. Please go ahead.

Thanks. I just wanted to follow up on Ben's question around the head office cost saves and the redundancy. When is the redundancy expected to finish and when can people in head office kind of think, right, my job is safe and I'm part of, I guess, the process in getting the brand back to where it should be?

Yeah, thanks for that question. And look, this is absolutely, of course, front and centre on our minds as well. Look, we're not going to comment on a call like this, to be honest, as to any of the specifics around this, other than to say we're asking our teams to move with speed, but also care for our team as we go through this process. It is really difficult, of course, for our team, and we want to be able to make sure, as you allude to there in your question, that our team are able to focus on the future And so we are moving very quickly, but we're not putting a specific timeframe on it. And that's because we want to be thoughtful about the way in which we're having individual conversations with teams. We're looking at how we truly make it easier for our teams to do their best work. And that takes time for us to really look at the design of teams, the way in which they work. And so I won't be able to answer your specific question there.

Thank you. All right. Okay. Thanks, Amanda.

Your next question comes from Adrian Lemmy with Citi. Please go ahead.

Thank you for taking another question. Look, my deal doesn't really get much focus on these calls, and I noticed that the GMB declined this period. I think from the half-year result, you can imply that it's losing money. So just given... There's obviously a pretty tough category. Catch got shut down because they couldn't make it profitable. Is an exit being considered in this portfolio review or is it kind of still critical to what you're doing in the marketplace space, Liz?

Yeah, thanks. So just to start with my deals, what my deals have been able to provide for us as a business is in particular some really strong capability around marketplaces. And we're particularly pleased with the technology but also the access to a lot of the third-party products that we've been able to now integrate into the Big W business and online platform. And that is performing very well for us. It's not something we've talked about on this call, but the traffic that we get on Big W is, Dan, anywhere between like five and six million a week at least. of digital traffic and so to be able to offer both the 1P range from Big W and also now a very extensive 3P range is one of the additional benefits of having MyDeals within the group. So it's been really important from that capability perspective and that capability is now also being integrated across our food business as well. We know that the standalone marketplaces outside of the big international players is a very challenging space. And so, again, I can only just say, Adrian, as we continue to look at our portfolio review overall across the group and the strategy for the go forward, we'll be assessing all of our businesses, which will include, of course, every business within the group.

Understood. Thank you.

Your next question comes from Sean Cousins with UBS. Please go ahead.

Thanks. Just a question on New Zealand food. Can you just talk a bit about the progress on the rebrandings that have gone on, be it sort of sales uplift, how it's resonating for consumers, how it improves the competitive position versus New World, and then just the impact of the implementation of the new fresh manager model, which I think Woolworths did in Australian food maybe in late 2019, but just curious about how that is impacting, I guess, team, but also how it's impacting the cost base there, please.

Yeah, great, Sean. Thank you for that. That is at least three questions, I'm pretty sure. But let me just give a flyover of New Zealand. And then we have got Peter on the call today joining us from New Zealand. So, Peter, I might throw to you in a moment just to add any other colour as well. So, look, I think certainly I would just say we're pleased with the momentum that we're seeing in New Zealand business. As you know, it is a very tough, highly competitive market. And so the work that the team has been doing, particularly when it comes to fresh, we're seeing that play through in terms of their voice of customer scores alongside also improving sales performance across those key fresh categories for us. The team are very focused on e-commerce as another key plank in their strategy. And again, you can see the strong increase in e-commerce sales And then you can also see from everyday rewards has been incredibly successful over there. It's one year on and it's 2.1 million, I think, active members in the New Zealand market. So it's been very well received. So I think from an overall perspective, the transformation is continuing there and the momentum has been positive and something for the team to continue to build on. Price is incredibly important there, as I know we've talked about before. There's some very major competitors that are very strong with New World and Pack and Save, and so we continue to really work on our price indices in that market. And then when it comes to your additional question on op model, the team has, again, done a lot of work in this space, and the The short version of the change is just to say that it's really a shift towards from going from a department-based view of our store operating model in New Zealand to a functional view. And that enables the team to be able to actually spend more time across the store with less barriers, if you will, in terms of the departments that they work in. So it's a multi-skill approach, which is actually great for teams experience, great for career building, but also good for customer experience because we're able to have more of the team spread across more broadly the aspects that need it most, like replenishment and the like. But Peter, I might just throw to you in case there's anything else that you might want to particularly call out on New Zealand and the transformation.

Thanks, Amanda. Yeah, the only thing I'll add, Sean, is You know, if you look back over the last year and a half, two years that we've been in this transformation, I think we initially put a lot of effort into our pricing position, and that's now in a place where we feel much more confident around our value proposition to the consumer. And we're seeing that in the feedback from our voice of customer, and we're seeing that in sales momentum and market share. And then the other piece of kind of the ticket to the game was obviously our store transformation. So it's important to just remind ourselves it's not just a rebrand. even though we're 60% through that rebrand or just over two-thirds, a number of those stores are being refurbished. Our average store age has come down quite nicely over the last two years. So those Ticket to the Game items have really got momentum, but then more importantly, the things that will differentiate us going forward, Fresh and Own Brands really got some really incredible momentum at the moment, and we're seeing significant volume growth. You see the e-com numbers there, which is fantastic, and then Lowelty is just over a year old now, and we've already got 2.1 million customers on our Lowelty program, which is also fantastic. So very pleased with the progress, but we're clear that we've got a long way to go. Thank you. Fantastic. Thanks, Peter. Thanks, Amanda.

Your next question comes from Ben Gilbert with Jarden. Please go ahead.

Good morning. Thanks for taking another one. I'm just interested, Matt, just on pricing in Australia. I know you sort of had that reset for the first half of fiscal 25 or this current fiscal year. Just how you're feeling your relative pricing is in the market? Have you had to put more incremental in through this half? And how are you thinking about your pricing position moving forward?

Yeah, thanks for that question, Ben. And, Paul, I might throw to you for any additional colour. I'd just say We continue to be very competitive on those indices against our major competitors and that's remained relatively consistent. We have been very focused as we called out earlier on a number of customer and trade activations across the quarter, particularly as we've called out in those long life categories which are incredibly important as you know. And so you have seen a real focus from a promotional perspective there, which has created more value for customers. And Paul, I might just throw to you for any other builds.

Thank you, Amanda. Yes, we are extremely competitive when it comes to price and are carefully managing our promotional program and offers, but also making sure we do it in a way that we think will drive maximum value for Woolworths. And so we're really being pleased, for example, with the performance in personal care with some of the events that we've run in personal care, bringing great value to customers, and actually that part of the store has been performing very, very well. It's great to see the team also think more laterally around how they offer customers something different with exclusive ranges that come into our business. So that continues in personal care with the introduction of Tree Hut, which is obviously a very popular brand in the US, and the team being able to bring it to this market exclusively to work with that, and your High Marsh bag. as well as another point of difference. Food continues to perform well. The big brand event in diet and sport actually brought bulk protein sizes into our business and attracted new customers. But, of course, there are parts of the store that are extremely competitive, and the market itself is under pressure and changing with more entrants, and that would be in the areas of pet and baby, and we're very focused on making sure we have a compelling offer there. All right. Thank you.

That is all the time we have for questions today. I'll now hand back to Ms. Bargwell for closing remarks. Thank you for joining us this morning.

We are encouraged by the steady customer scores that we're receiving and the slightly improved sales momentum that gives us something really as a team to build upon. I'm very grateful for the incredible hard work of our leaders and team across Woolworth and are very much looking forward to this quarter's trading. Thank you.

That does conclude our conference for today. Thank you for participating. You may now disconnect.