Grocery
Woolworths announced prices were slashed by 0.6% in the June quarter and 0.2% in the March quarter, with meat, fruits and vegetables hit the most. Pixabay

Australia's biggest supermarket chain, Woolworths, has registered a 2.3% rise in shares, its highest in six months, after declaring a special dividend, despite a 93.3% dip in statutory profit to AU$108 million for 2023-24.

The company declared a final dividend of 57 cents per shares, along with a special dividend of 40 cents apiece, reported Reuters.

Despite the 93.3% drop in profit, the company announced Wednesday an annual net profit of AU$1.71 billion, after tax, for the year 2023-24. There has been a 0.6% decrease from the year before.

The plunge in profit margin was consistent with the expert analysis, as the grocer slashed its shelf prices to compete with rival group, Coles. Growing operational costs and inflation-induced margin pressures led to a declining sales in key divisions, as the company struggled to keep pace with consumer trends.

"Looking ahead, improving customer scores, item growth, and lower inflation provide reason for optimism," outgoing CEO Brad Banducci stated. "However, we also know that our customers remain under significant mortgage and rent-related financial stress and anticipate them to remain cautious with the trading environment expected to be challenging for the rest of the financial year."

The drop in profit margin is being attributed to its loss worth AU$1.6 billion from writing down the value of its New Zealand stores and drinks division, Endeavour, reported AAP.

Woolworths wrote off NZ$1.6 billion (AU$1.5 billion) from the NZ$2.3 billion value it assigned to Foodland New Zealand, which was acquired in 2005. It also reported a loss of AU$209 million on its investment in Endeavour Group, which owned BWS and Dan Murphy's, after altering the method of recording the investment.

The company on Wednesday also announced prices were slashed by 0.6% in the June quarter and 0.2% in the March quarter, with meat, fruits and vegetables hit the most.

However, the high profit recorded by the two supermarket chains led to calls for controlling the "supermarket duopoly," as rival grocer Coles announced AU$1.1 billion profit on Tuesday.

"Australians expect a fair go but there are businesses out there making billions while people struggle and that's just not right," NSW Farmers vice president Rebecca Reardon said.

A senate inquiry earlier had recommended ending the duopoly enjoyed by the two supermarket giants after allegations of price gouging and anti-competitive behavior. The inquiry had focused on Woolworths and Coles, which controlled control two-thirds of the market.