Woolworths Holdings Ltd

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

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

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

Yeah, thanks, Adrian, for that question. When we look at the year to date, I actually think about it really in three phases. So maybe just to start there. So firstly, as you know, the first eight weeks were well below our aspirations. Then when we look at those weeks, really at 9 to 14, certainly what we saw was an underlying improvement in items, underlying steady improvement in transactions, but somewhat offset by the fruit and vegetable deflation. And so you see that in our results. We also have seen, as we've reported our quarter two sales, a steady, modest improvement in items and transactions as we've come into the quarter. And that's what we're focused on. We're focused on building sales momentum. It's the critical quarter for us. We're really excited about the plans that we've got in Australian food as we come into Christmas. And we're asking our team to be really focused on bringing the very best of Woolies to customers this Christmas. So, you know, it's been a steady, I would say modest improvement that we've seen across the quarter and into the second quarter.

And I think I just add there's not much difference in the base that we're cycling over between Q1 and the start of Q2 last year.

Thanks, that's very helpful. And just to be 100% clear, you're not seeing any material difference in terms of the online versus in-store trends that you saw in the September quarter into October?

Yeah, thanks, Adrian. I would say some micro-improvement, actually, in terms of our store performance, if I was to call anything out. Both online continues to be a really strong performer for us, obviously driving a huge proportion of our growth. What we've been pleased to see, and I wouldn't want to overplay this, it's very, very early... early days but a modest improvement that we're seeing in our stores' performance as well. We'll continue to focus on that.

Thanks very much.

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

Hi, morning everyone. Can I just follow on from that question on the October trading update? I guess just a little bit weary that it is such a short period. I think it's three weeks. You sort of talked about investment in loyalty etc in the month of September. We've also sort of heard some feedback that some of the categories have seen stock weighting uplifted a little bit to address some of the availability issues. Do you feel like there has been a little bit of a positive step change in the business in October and is that relative to the broader market or is it just too short a period to tell?

Yeah. Thanks, Michael, for the question. So let me just start by saying, you know, we said we would take action when we last connected in late August, and we have a lot of that has been focused on improving our customer engagement and uplifting our offers. So you're right to call out certainly a focus on loyalty on some of our promotional activity, but also some targeted activity around availability as well. That really didn't start to flow through until late in the quarter, so mid to late September. And what we're calling out is really a modest improvement as a result of all of those actions that we're seeing. I too would want to just reinforce your point, which is it's very early days, but we are pleased with what we've seen in terms of the customer response to those activities. it gives us something to continue to build on as we head into the critical quarter for sales in quarter two. So we're very focused on that. And our team's response as well has been excellent. And so, yes, I would say early days, but some early signs of progress being made. Thank you.

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

Morning, Amanda and team. Just got an interesting, got a question on the promotional environment. I think in the release you're saying with reference to cartology that there was a lower rate of growth due to cycling several promotional events in the quarter including the Olympics. It'd just be interesting if you could maybe give us some colour on the promotional environment and it looks like you've kind of maybe moved away a little bit from collectibles or funding that as well and then maybe a bit more into the rewards programs and the kind of loyalty and the points side but Just a bit of, I guess, clarity on that would be really helpful.

Yeah, thanks, Tom. Just to pick up on your question on cartology, what we're calling out there is the sales growth that we have shared is just lower than what we've seen in recent times. And that's a case because of really a couple of things. One is the Olympics that we called out, and the other is the Disney Olympics. program didn't perform to expectations overall. And so there has just been a year-on-year comparison, a slightly softer promotional program for cartology to be able to work with our supply partners on. So that's what you're seeing there. When we look at then promotional activity overall, You know, we said that we would take action in terms of building sales momentum. We said we were certainly not satisfied with the results that we delivered in terms of sales. And so we absolutely did, through mid-September and continuing, went back and had a look at, have we got the right balance in terms of our everyday rewards activation? And so first and foremost, you will have seen more visibility around everyday rewards in our stores and online. And that's about making sure that Customers and members more broadly are aware of offers. And so we did the all-member offer on PointsBlitz, for example, which required you to scan and you then get those additional benefits. We also have uplifted some of our personalized offers as well. We wanted to really improve the value that we're providing to customers and members through everyday rewards. We have also reviewed all of our promotional activity across Woolworths Retail. And then last but certainly not least, we've increased the generosity of our e-commerce offers. We want to make sure that when customers are thinking about value, they're really thinking about it in terms of, as we know, the product price, the promotions, but also all of the other value that they're able to capture from Woolworths, whether that be through loyalty or through other customer acquisition offers. And so we've taken that action. We're pleased with the early results in terms of improved engagement from customers in various different ways. If you look at our everyday rewards program, some nice improvements in terms of boosting numbers, digital traffic, so engagement continuing to improve. Some of that is translated through into some modest improvements we've called out in terms of item growth and transaction growth. And so we're very focused on making sure that we just continue to build that as we look to the sales quarter that counts the most, which is quarter two.

Great. Thanks, Amanda.

Your next question comes from David Errington with Bank of America. Please go ahead.

Good morning, Amanda. Look, Amanda, I'm a little confused at the moment, and I'm confused because I want to believe that the business is resonating with customers. with your voice of customer. I want to believe that you're starting to get more traction. But then the lag, if you like, and the numbers just aren't demonstrating that. And where I'm going with this is when you talk your item, your comp item growth this quarter was 0.5. Your comparable transaction growth was only 0.1. The volumes are really, really down. And I just listened to you answering Tommy Kira's question then, when you're really putting a lot into everyday rewards, you're really putting a lot into these offers. Now, I do a lot of shopping. I do. I do. I don't take my everyday rewards card. I just want the lowest shelf price. And Kohl's has a high-low, or they're the lowest shelf price. You guys have got to go through this everyday rewards thing, and I'm just confused. I think that this feedback that you're getting from your existing customer base might be pleasing. Your existing rewards might be pleasing, but new customers are not coming back into the store. So can you give us a bit of an idea as to why this disconnect between actual performance and feedback from your customer base? Because that's the bottom line. Why is there this disconnect? You're getting positive feedback. We like to believe it. but it's just not resonating in the numbers. And I really just, I'm confused as I've ever been.

Okay, well, thank you, David, for that. And thank you for shopping with Woolworths. I'm going to assume that that was Woolworths that you're shopping at and referring to there. Yeah, let me just take a step back and say what we're calling out is very modest early signs of improvement. And I certainly don't on this call want to suggest anything other than that. And yes, you're absolutely right. We have got a strong customer franchise of customers that are reporting consistently better experiences that we're tracking through the 60,000 voice of customer surveys we do each and every week. However, it is also the case that we need to continue to improve our reach across the broad grocery customer base. And so, yes, I did talk to everyday rewards and loyalty there, so you're right. What we did with that is make sure that we uplifted it and made it more visible for those people who perhaps it's not front of mind for in terms of everyday rewards and the value that you can capture from that program as a customer. But we also recognize, and I agree with the point you make, which is we need to appeal more broadly in terms of value and making sure that customers are aware of that value. And so across certainly September and into the Christmas quarter, you should expect to see from us a more visible offer, whether that's through the traditional catalog, for example, bringing to life the product and price offers, continuing to improve the promotional program that we have available. So key lines that really matter, particularly for families at great prices. and making sure that we have the stock weight that's required to be able to sell those products right throughout the entire week. So just to summarise and come back to your overall point, yes, we've got a strong franchise of existing customers that have continued to deliver better customer experiences, but we've also got an uplift that we need to do in terms of our broader reach of customers, and that's what we've done.

Yeah, that seems to be the point, the broader reach. And if you can get that broader reach in this quarter, you're setting yourself up for a pretty good second quarter. So all power to you if you can pull that off.

I can just say we are hyper-focused as a team. I'm just looking at Annette here across the table. We are very focused on that. We've had some great events with our team over the last month as we bring forward for them what we've got planned for Christmas. Store teams are feeling well-supported. Our commercial teams have now settled in with their new leadership structures and we are hyper-focused on making sure we bring the absolute best of Woolies this quarter.

Thanks, Amanda. I really enjoyed your answer. Thank you.

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

Thanks. The question is just regarding non-food share loss. I think you've called out baby pet and home essentials are still weak. Can you talk a little bit about the changes that Woolworths has embarked on to address the share loss in non-food and is it fair to say that you're still losing share in that category or do you think you've gone, some of the changes you've made have gone some way to halting share loss please?

Yeah, thanks Sean and yes we continue to need to focus on those everyday needs categories absolutely, they're the part of our offering that's certainly not performing to expectations and we need to do a lot of lot of work on. If I just talk about a couple of those categories and then I'll throw to you in a moment. Just when we take the pet category, there are a number of areas here where we can and should do better. And so when we look at our price competitiveness, particularly in bulk range in dry dog food, for example, we know that that's very competitive, particularly with some of the recent entrance into that market, we've taken the opportunity to sharpen up our unit pricing there. In baby, there is a number of challenges we had in the quarter with own brand nappy availability. But certainly we have focused there in just being more competitive. I mean, young families for us are such an important customer base. And so as we've looked at what do we need to do better, that's certainly been an area of focus for us. And so as we, you know, have looked at the performance of the business overall, there has been a series of actions that we have taken that are live in the market. And then there really is a much larger, more ambitious reset that needs to happen across those categories in terms of the offer, which will, you know, progressively show through over the next six and 12 months. But Annette, I know that's an area you... Very focused on. Anything else you want to add there?

Oh, I think that's right, Amanda. I think the soul for some of these categories where we'd like to see improved performance is really you have to operate in multiple horizons. So there's a very immediate piece of work being done, as you've mentioned, around the pricing and the products that are on the shelf and availability of those products. In Baby, we had a very good launch of Millimoon earlier in the year. but really we've amplified that activity and the plan that sits around baby, albeit we have had some challenges in availability. But what you'll see in the new year as we come in to some plans that have been underway for the last few months is some improved product, some rebranding of some packaging, and you'll actually see us reset the baby category. So you really have to operate on multiple horizons, and as you've mentioned, very similar in pet. We've had a really great level of success with some of these bulk products on LSP, our lower shelf price program, with things like Pedigree, an eight kilo dog food product that's now as a bulk product sort of sitting just above $3 a kilo, and our customers are really taking advantage of that really great bulk value. And those larger pack sizes are certainly something that we hadn't been focusing on in the past. And again, new products come in in the cat category this side of Christmas, but actually in the new year, you'll start to see some of those things shift in the dog category. So I think it is a multi-horizon. You have to be able to operate and drive the business in the current quarter, but you've also got to be building the plans into the future. So, you know, very big focus for us.

Yeah, and I think great to see also that Tilly is the cat food range coming in from Petstock into the Woolworths retail offer as well. And so that partnership with pet stock being able to access some of the really great home brands that they've developed there is also pleasing to see.

Yes, and more to come in the new year. I can't speak to them on the call specifically, but in February you'll see some of those things happen in the dog category as well. So I'm very excited about what's coming. And I'd say very similar in personal care, it's another category we're very focused on. We've had some really great launches this year with Tree Hut and some of these innovative categories that our next generation of consumers are really coming into our stores and actually asking for before they even hit the shelves when they hear that it's coming, we'll continue to do those things and very similarly shape the category into the new year.

Sorry, just to be clear, you said you think you're still losing market share, but you've got a plan to fix it. You've outlined a lot of detail around short and sort of medium-term horizons about how to address it, but is it fair to say that you're still losing market share?

Yeah, I think it's fair to say that we've got a lot of, you know, share is a, we've got a lot of work to do. We're seeing an improved, very slight improvement in our performances. We've taken some of these actions, but let's be frank on this call. We've got a ways to go and we're focused on that. We haven't, or we're not calling that we're satisfied with where our share position is or has been.

Great. Thanks. Thanks, Ned. Thanks, Amanda.

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

Morning, Amanda and team. Just a bit of a follow-on from some of the prior questions, but more specifically around cross-shop. Some of the data we're seeing looks like a lot of the market share shifts over the past 12 months or so have been relating to that cross-shop between you and your largest competitor. Any comments that you can make on what you're seeing on the cross-shopping front, either through the first quarter and into the Q2 trading update today, please?

Yeah, thanks. Let me talk about cross-shopping to start with and then I'll just share a little bit as to what we're hearing from customers as well. So in terms of cross-shopping, you know, we're sitting at all-time records, you know, I'd say this time last year. What we've seen is a slight easing of level of cross-shopping actually across the market overall. So I'm not talking about any one particular competitor. It's a very broad market as we know now for groceries in particular. So we've actually seen it come down and stabilise. So that from our perspective is obviously pleasing to see. If we talk to customers as we do regularly in research and focus groups, we continue to hear a large portion of customers would report that as cost of living eases, as they look forward to that, they will also look forward to reducing the amount of cross-shopping that they're doing. Now, we haven't seen that dramatically show through today, other than the reduction I called out just earlier. But that's certainly a very strongly held view from customers as they look to save time as cost of living pressures start to ease. And then, you know, as we're very focused on quarter two and sales right now, we're also being, you know, very curious as to where are customers at in terms of their sentiment overall. And we're also pleased just to hear that there is an increased level of optimism around Christmas this year. So as we've been tracking that, those levels of, you know, excitement and looking forward to sentiment from customers has been increased on this time last year and in fact they're also calling out that they would like to spend a little bit more time cooking and celebrating with friends. And they're looking to do that in a very modest way. I don't want to, you know, call it we're seeing a very large swing here, but certainly compared to where we were in the last couple of years, there's a definite uptick in customers looking forward to Christmas, customers reporting they'd like to cross-shop less when cost of living pressures ease, but of course, The market's changed a lot over the last five years, and so we know we've got to bring a better offer for customers so that they continue to choose us first. And, you know, we've shared today we've made some adjustments over the last quarter, and we've got a lot more work to do to continue to improve that.

Thanks, Amanda. And to be clear, is that slight easing for the fiscal year to date, or has that really started to ease in the second quarter so far?

Oh, that's actually over the last six months we've seen a stabilisation of that with customers then reporting that they would like to decrease. We need to see that happen. So to summarise, I would say it was at record levels this time last year. It's reduced as we've come into the calendar year, stabilised. And now we have customers also reporting that they would like to reduce the level of cross-shopping and save a bit of time. We haven't seen that. That's great.

Yep.

Thanks, Carolyn.

Your next question comes from Brian Raymond with JP Morgan. Please go ahead.

Hi. My question's back on sort of availability and just particularly around inventory and labour. I just wanted to understand... So given your flat in-store sales profile at the moment, supply feedback does indicate that availability levels have dropped year on year and there's been some action taken, as you've highlighted. But I just want to understand the drivers of it and the way to fix it, given what we understand, default levels, et cetera, are sort of back to normal generally. Is it in-store labour hours? Is it how you're planning your inventory around promotions and shield categories? And then just can you get it back on track for Christmas is the key factor that we're all trying to work out.

Yeah, let's start with your last point. It's our absolute intention to be on track for Christmas. So from an availability perspective, as you call out, Brian, it's overall, if you look at our national numbers, whether it's on store service levels, whether another measure that we use, which is shelf-edge availability, or yet another measure we look at, which is actually on first-pass picks for e-commerce, All of those are solid. However, as you look then at the detail of how individual stores are behaving, there is opportunity for us. And so we have made a number of adjustments, as you say, to our settings when it comes to availability. So first and foremost, an upweighting of promotional stock on key lines in particular. And that's based on feedback that we've been receiving from customers. and some of our store teams as well. So we have made adjustments there. We also have taken the opportunity to look at some stores in terms of the hours that they need to be able to keep promotions on show. And that's particularly for some of our higher promotionally indexed stores. who are trading very strongly and so we've made some adjustments there and we'll continue to look at that as we move into, you know, really the critical, critical time for us with Christmas. And then, Annette, are there any other call-outs you would make on availability?

The only other one, well, there's probably two, Amanda. There have been some challenges in our meat business and it's a bit of a culmination of a couple of things, but the constant increase in livestock prices did have us thinking that the consumption of meat would actually come back and it actually hasn't. And so we've readjusted our livestock plans and that will definitely solve well before Christmas, which is pleasing, but it's not quite where we'd like it to be. And the only other thing I would say, and I think that Brian mentioned it, is we are constantly looking at our hours in stores to make sure that we have the right amount of hours to make sure we're filling our product and in particular that back into the weeks.

Yeah, and then there's the other, which is more category-specific, as you say, would just be the demand we're seeing in some categories. And I know this was reported earlier this morning as well. Just if you take protein yogurts, for example, just the volume there in terms of double-digit unit growth is just incredible. It's continuing to present some challenges in the chilled category, I know, for us, but that's more of an industry-wide challenge.

Okay, great. Thank you.

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

Good morning, Amanda and team. Just on the comments around promotions and promotional effectiveness in the below the line and then the above the line, have you actually step changed versus your plans say six months ago, three months ago from what's sort of kick-started this sort of improvement to October? And if that's the case, are you seeing a greater return on investment from promotion? And do you then lean into that a bit more aggressively to get the traction back?

Sorry, Ben, I might just need you to repeat that question for me. It was breaking up.

Apologies. Just in terms of the comments you made, how you've changed a number of things in terms of planning around promotions below the line and above the line, and we're seeing some early signs of that in October. Is that a step change from where you were thinking three and six months ago in terms of dollar spend? And with that in mind, if you're seeing a higher return on investment around promotions, do you lean into that more aggressively now into Christmas to really get that momentum back into Christmas and kickstart into the year for 26?

Yeah, thank you. Thanks for that question. Yeah, so from an above-the-line perspective, we've been really pleased with the activity that we have done overlaid into our plans. It just brings more visibility for members around the value that you can get back, but also the value, obviously, that they're earning as a result. And as we know with our loyalty program, that comes back into our stores as they choose to burn those rewards points. So we've been happy with that, and it is a step change. So you're right to call that out. I think Annette and the team are very much getting in and behind our everyday rewards loyalty program. And then with the below-the-line activity, we have been improving our personalisation capability here. And so as we've adjusted activity certainly in this quarter, we've also been unleashing some of that new capability that we have in the one-to-one space and creating more value for customers but also giving our supply partners more opportunities to be able to partner with us in this space as well. When we're thinking about value, we just want to come back to the point that David made overall, which is we're looking at value from a shelf price perspective. We're looking at the loyalty and the rewards program that we can offer, and we're really pleased with the results that we've seen recently from Everyday Rewards. But we're also conscious of the marketing activity needs to be broadly accessible, and so making sure that we're in all the right places, whether that be the catalogue, the digital, YouTube, TV, et cetera, is incredibly important, and so we certainly intend to be very present for this quarter ahead. It's about balance and just getting that balance right.

And are you seeing it resonate with the main shoppers? Because it seems like there's a lot of meat, like poultry, there's some big basket activations that are coming through, and I don't think Woolies has had a traffic issue at all. It's just been a type of shopper in getting that main shop. Are you seeing any green shoots around the main shoppers, the big shops?

Yes, we certainly have been very focused on what are the lines that are going to matter most to families and have we got the right shelf prices, have we got the right promotional pricing and then have we got the right incentives from everyday rewards and so some of those key lines that you call out are really important basket builders for us and so we've been very focused on that because we do want to continue to see those early signs of improvement, very early days in terms of transactions and items into store, we want to see that continue to build and that's obviously part of our plan to be able to deliver against that.

Fantastic. Thank you.

Your next question comes from Craig Wolford with the MST Marquee. Please go ahead.

Good morning, Amanda. You've had a strong emphasis on this customer trust. Your voice of the customer scores as a prerequisite for better sales and that has now improved. but the first quarter sales trend softened even if we look at volume metrics like transactions. So just interested, would you list other factors other than trust that you need to see improve in order to see better sales growth?

Yeah, absolutely. So let's just start with, for us, even the lower shelf price program for us is a, a good litmus test of exactly that and what we're seeing in the lower shelf program is actually double digit unit growth coming from that. So that for us is a real indicator of some of those actions that we've taken absolutely resonating with our customers. When it comes to the sales trajectory across the quarter, I mean again, just to be really clear, well below our aspirations. So I certainly wouldn't say anything other than that. What we've seen, though, is an improving underlying momentum when we look at things like items across the quarter. And so that's what we're particularly focused on is item growth and, of course, then, of course, transaction growth as well. And when you look at it on a month-on-month basis, we have seen some very early, very modest improvement in terms of items across that first quarter and obviously into quarter two. And so that for us is a key metric. When we're looking at a quarter one sales, there's the back half, the impact of fruit and veg deflation, which just does play through there. But again, I want to just be really clear, we do need to continue to be focused on transaction growth We're very focused on getting better growth into our stores as well, accompanied by e-commerce continuing to be a really important driver of growth for us as well.

So you don't see any other factors that need to improve? The voice of the customer is there, but it feels like there must be something else.

Yeah, so in a broad context, so if we just step back from the quarter, What we've also called out is there's the activity that we've undertaken to improve our sales momentum. And then we've also said, have we got the right products and prices in each one of our key categories going forward? And we've talked on this call about the fact that everyday needs category more broadly is one that is underperforming for us. And that requires a combination of being sharper on some of our promotional pricing and in the short term, but also there's a reset that's required around our range. Have we got the right bulk pack ranges in the pet area, as Annette's called out earlier? Have we got the right offer for our young families in baby? And what we would say is there's opportunities for us to do that. And so you'll see some of those things start to play through across the next six and 12 months. And then there's also the fact that, as we've talked about on this call as well, just that reliability of making sure that we've got the promotions available when customers are wanting them, including over the weekends and late in the afternoon. You know, we want customers to be able to count on us. And it's that, you know, when we're talking to customers or looking at research, a lot of it is about Woolworths just being increasingly reliable. That's reliable on price, reliable on having the product there, reliable that an e-commerce window is available when I want it. And they're the things that we know will see us continue to improve our trust scores. It's not any one thing.

That's great. Thanks Amanda.

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

Hi Amanda and team. I just had a question around online sales growth. Very, very strong. this quarter, but it seems that you've called out some of the shorter turnaround, I guess, options as the driver of that growth. And in the past, you had called out those options as probably being relatively lower margin. Does that still remain the case? Is that the way we should be thinking about that sort of mix within online sales?

Yeah, thanks, Richard. We certainly have called out what I think is quite extraordinary growth that we're seeing in the on-demand You know, we've got 42, 43% of our orders in delivery now that are in that on-demand space growing rapidly. So for us, we look at that and it gives us confidence that certainly that demand for speedy deliveries, fast service is where customers are increasingly going. We also have seen some great growth, by the way, in our collections business. And so that for us is a particularly important part of our e-commerce offer overall and continuing to grow really, really strongly. And then from an overall sales call, of course, but just in terms of the way that we think about mix, the mix of sales and profit that we see from on-demand actually we're very pleased with the performance that we see there. It's got a different mix of products in it. It's serviced in a different way. And we're seeing an increasing number of customers actually increasing their frequency and their overall spend. So we're absolutely delighted to drive the growth of certainly our on-demand business. What we've done over time there is improve the productivity of that channel. We've done a lot of work to be able to be more efficient in the way that we pick those. So, no, that's an important part. We want to win in that ultra-convenience space. I'm just looking at Amitabh. Anything else, Amitabh, you would add to that?

I think you said it well, Amanda. There is the convenience for the customers who really want to shop at short notice, which is what we are driving through on demand. And the convenience in terms of place where people are very comfortable picking up from stores, which is actively driving that, which again, as you can imagine, is structurally advantaged from a profitability point of view.

So it's the pickup increase as well, which is a key, I guess, contributor to the margin mix.

Yes, that's when, as we've reported, while online overall has grown at 12.9%, pickup in collections have grown at 19%.

Yeah, okay. All right. Yeah, that all makes sense. Thank you. That's very helpful.

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

Hi, Amanda. I just had a question on the Australian food business. You've got a comment in page three that says, after a challenging start to the quarter, Customer investment was increased. I just wanted to understand better. I know it's a sales call, but you do have profit guidance out there. Was that effectively your plan the whole time to increase your customer investment across the quarter? Or was it more a reaction to weaker than what you wanted sales growth? And have you been able to sort of adapt costs on the other side to sort of try and match that increased investment? Thanks.

Yeah, so let me kick off on that one and then Steve, you might want to add to this as well. Certainly what we said at the end of August, Phil, is that we needed to improve momentum that we were seeing in our Australian food business and that we would be focused on building sales momentum and that's exactly what we've done. That has required us to go back again and rebalance a lot of activities that we're doing across the business overall. but to make sure that we're putting investment in the right places. And so that has absolutely been the case with loyalty and some of our product promotions and marketing activity. Also has been the case when we look at availability and just making sure that in those late afternoon, over the weekend and into Monday, that we've got the right level of product available for our customers at some of the busiest times certainly of the week. And so we have taken action on all of those things. However, we on this call have got nothing further to add in terms of our overall outlook that we provided with regards to profit. And so Steve, I might just hand to you.

Yeah, thanks, Amanda. I mean, Phyllis, you know, you've been following this sector for a long time. Sales drives the economics of this business, and so investments that drive sales can be good for the P&L. You know, we gave some earnings guidance in August. We're only three months into the year. There's nothing that we see that requires us to give any update to that. As you know, there's many levers in our P&L process. that we need to get right. We've got a strong cost discipline and delivering savings that we committed to and that remain on track for that $400 million savings. The team just talked to some of the mixed impact in e-commerce, which can and should be positive. And, you know, we said in August we're not happy with our stock loss performance, and so we've got an ongoing focus on stock loss, all of which are levers that we need to manage in delivering both the top line and driving our sales momentum, which is the number one priority, as well as delivering the bottom line, which is also important for us and our shareholders.

Thank you.

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

Thanks very much for taking a follow-up. Just keen to understand where you think you're up to with availability, particularly in some of those high turnover stores Sunday afternoon relative to where you need to be.

Yeah, thanks, Michael. We would agree we've got opportunities certainly in exactly as you call out. the high volume stores and also some of our high promotional mix stores over the weekend and also in some stores late in the afternoon as well. We have taken a number of steps across the quarter to improve. Our overall availability metrics again at a national level are very solid. It's the detail in terms of individual stores that has needed to be addressed and so we've done a number of things around up weighting some of our promotional stock weight for front ends and also for some key stores that are very promotionally intense. We've got targeted activity across those stores also in terms of just the hours the team needs to be able to make sure that those products are available and we'll continue to monitor and manage that and make sure we've got those settings right As we head in now to eight weeks to Christmas, absolutely critical that we get that service level right. So we'll just continue to optimise that as we go forward.

So you still think you've got a little bit more improvement to make there?

We do. We do. Again, it's one of those interesting ones. You can look at the overall numbers. We really need to get into the very specific details, store by store, hour by hour, and that's exactly what we have done. We'll have to listen to some feedback from our suppliers as well and take an action, and we'll continue to monitor and see that that is delivering the improvements, and if it's not, we'll adjust accordingly.

And do your store teams have the tools and the ability to communicate where they feel like they have more gaps than they should?

They have... Sorry, just repeat that question.

Well, do they have the tools to measure availability in their stores and communicate it through to head office where they feel like they're missing out on sales because of availability problems?

Yes, they absolutely do. And I can assure you they also share that both directly with us when we're out visiting stores, you know, as in... Hurstville and Roseland's on the weekend, and those stores are both very promotionally intense, and the store teams would absolutely raise that with us, both in person and directly, but also through the various operations teams, and we'd make the appropriate adjustments there. They've got the ability to be able to manage their hours across the store, but also to recognise when they need to make the appropriate adjustments. And everyone in Woolworths is very clear we're focused on driving sales and making sure everyone's got the tools available to them to be able to do that.

Great, thank you. Your next question comes from Brian Raymond with JP Morgan. Please go ahead.

Thanks for taking the follow-up. Mine's just back on loyalty offers that stepped up in September and October. I just wanted to get a feel for the magnitude of that step up and trying to put it in context. I know the mechanics of it from a P&L perspective are a bit different to a promotion, but is there a way you can quantify the amount points either issued or redeemed have increased and also how that flows through? Because, yeah, I'm just trying to put it in the context of this mid to high single-digit EBIT growth and whether this was all in the plan and kind of all on track, as Steve mentioned, too early to change that. But just trying to understand the magnitude of this change or how significant it is.

Thanks. Yeah. Yeah, look, Brian, I wouldn't put a figure on it other than to say, you know, we always, as we head into Christmas, do have an increased level of focus on loyalty and rewards points. We've got Bank for Christmas coming up for our loyalty members as well. And so there has been an increased investment, but as you also call out, that means that members earn more, but they also are able to come and burn more in our stores. And certainly Christmas is a favourite time for members to be able to do that, not just through Bank for Christmas, but through burning off the $10 off and transferring to Qantas if you happen to be part of that as well. So, look, I wouldn't put a number on it, but we've already called out that we've got nothing to share with regards to the expectations we've set on profit guidance for the year.

OK. And then if I can just sink one in on just... How do you guys measure success at Christmas, given last year was so disrupted, particularly in Victoria? Like, what are your... Like, how are you targeting that? Is it versus two years ago? Is it a share thing? Like, I'm just trying to understand. You don't have to give us exact numbers necessarily, but just from a strategic perspective, the focus is there. What is the metric you're looking at and how should we be measuring it for Christmas?

Yeah, look, we're looking for continual improvement from where we are right now. So we do need to see overall improvement in terms of, obviously, the sales. we'll look at it, frankly, breaking it out based on states and regions because it was a very different Christmas in Queensland compared to obviously what we saw in Victoria and some parts of New South Wales. And so from our business perspective, with eight weeks out now, we've started our seasonal reporting, but we have also got reporting on the comparisons with the industrial action period as well, just to make sure that we're really clear about those like-for-like comparisons. So, look, I wouldn't be able to share more than that with you, Brian, but yes, it does make it a little bit more complicated this year as we compare quarter to.

The next question comes from Craig Wolford with MST Marquee. Please go ahead.

Hi, Amanda. I'm going to switch tack. I just want a question on Big W. Just trying to understand the moving parts in its sales results. It's probably positive, but the average item value looks to be up quite a bit because the items were down 3.8%. I know you talked about positive sales in apparel, but the items to be down that meaningfully just doesn't look like a great sign. So just trying to understand the moving parts on the Big W business.

Yeah, thanks Craig. I'll just turn to Dan to talk through that. As we've shared, we certainly have been pleased with the clothing performance, but I know there's some detail there, Dan.

I mean, the main thing to say on ASP, Craig, is that this time last year we had a lot of units go through the P&L, especially in clothing, through winter clearance. And so those items, it's given an item lift last quarter and it's taken ASP for the business down, which is obviously a very expensive thing to do. This year we've come out of winter much, much cleaner than that. And so we are seeing kind of inflation, basically the ASP is up on that basis. That's not on the, we haven't raised prices to drive that ASP increase. So we have kept prices very steady and competitive. It's really the cycling of clearance investments that's driving the large part of that.

And I think, Dan, the other component that's worth adding is we're pleased with the start of the spring-summer campaign and clothing range and home range. So we're seeing, in terms of the mix of sales, more full-price sales than we saw last year. So I think, actually, we would say it's a healthier mix of sales. You're right, Craig, it is distorted. And we have much more distortion on mix in Big W than the other businesses. in the group just because of the different category dynamics that exist. But the main driver is this health of the clothing sales that we're seeing.

That's clear. Thank you.

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

Ma'am, my follow-up question is just actually harking back to one of the comments before. Effectively, you're saying that So correct me if I'm wrong, shoppers are telling you they want to reduce the cross-shopping and that's sort of their expectation as we move forward. Does that create some urgency now? So if they're going to stop cross-shopping, then you want them to be shopping with you now so they're staying? Just in terms of, yeah, just some urgency and sort of lock that behaviour in now if they're going to ease back on the cross-shopping, if that makes sense.

Yeah, that absolutely does. And this is what customers are indicating they'd like to do, not what they are doing. So I just want to be clear on that too. But absolutely, and that's why, you know, as we've talked on this call today, we have been really focused on sharpening up our offer every day in stores right now across the board and at the same time really going back systematically through each one of our categories and making sure as quickly as possible we've got better ranges available in some of those key categories where we've shared we are underperforming and we need to do better on. We're also making sure that When customers come and shop with us this Christmas and particularly in places like Victoria which was so deeply disrupted last year, we want to make sure that they have a great experience and so making sure that we've got the right team available to be able to provide that service is a big focus for us absolutely and we want to see both our loyal customers which we've got a very strong franchise around continue to shop with us, add more items to their basket, and so to be able to grow that. But we also think we've got an increasing opportunity, if we get it right, to be able to have some of those customers who might not have shopped with us for a little while, shop with us at Woolworths.

Okay, thank you. I was going to say, part of my question is really around the urgency. So maybe if I rephrase it and said, like all the changes that you're talking about and that you have made and you are making, Do you feel like the changes are being made quickly enough, with enough urgency to get them in place?

Yes, the changes that we can make in the short term, yes, I could not be more pleased with the changes that the Woolworths retail team have been making over the last couple of months and the plans that we've got for Christmas. But the reality is that for those areas where we've identified some structural changes we need to make to categories in terms of range, that is important for us to have the right conversations with our supply partners, allocate the right time to be able to work through that. We need to work within the grocery code, of course, as well, and we're very, very mindful of that. And so as quickly as we can, we are focused on making those improvements, but we do need to do it in the right way, in a way that's sustainable for our supply partners as well.

Okay, that makes sense. Thank you.

Thanks. Thank you. There are no further questions at this time, and that does conclude our conference for today. Thank you for participating. You may now disconnect.