As at: 25 September 2026

Executive Summary

Key highlights

In this report, we review WHL’s FY26 results released in September 2026, and assess the impact on our outlook:

Financial results at a glance:

• Group turnover and concession sales increased by 4.3%, with growth across all businesses, although 2H26 performance was more moderate than in 1H26. Revenue from Food rose 5.7% for the period, with LFL sales growing 3.7% and price inflation of 4.7%. FBH revenue advanced 4.4%, with LFL sales up 4% and price inflation of 2.4%. CRG revenue edged 1% higher for the period, with LFL sales rising 1.6% and online sales contributing 27.8% of the segment’s turnover and concession sales, the highest among the segments, compared with 7.3% for Food and 6.3% for FBH.

• Group gross profit increased by 3.4% for the year, although the group gross margin declined to 33.4% from 33.7%. This was primarily driven by elevated promotional activity in FBH to clear excess inventory, which reduced the segment’s gross margin from 47.3% to 46.0%. Food maintained its gross margin at 24.9%, supported by operational efficiencies that offset higher fuel costs. CRG’s gross margin expanded to 57.7% from 56.4%, reflecting a greater proportion of full-priced sales and more targeted promotional activity. Group operating expenses grew by 3.4%, driven by a combination of store cost growth of 3.4% and growth in other operating costs of 3.6%.

• Group adjusted EBIT expanded by 2.8%, supported by stable earnings growth in Food and Financial Services, and CRG’s return to profitability from a prior-year loss. These gains partly offset weaker profitability in FBH, where higher store and other operating costs weighed on earnings. As a result, the group adjusted EBIT margin declined modestly to 6.3% from 6.4%. Adjusted diluted headline EPS rose by 3.7%, with the total dividend for the year growing 5.9%

• Group FY26 results were largely in line with the voluntary trading statement released previously, which pre-empted the full year results.

Analyst thesis

Our recommendation is based on:

• Food remains a core earnings anchor: Food continues to be the stabilising element of the Woolworths Holdings Limited’s (WHL) business and has been the largest contributor to revenue, particularly since the sale of David Jones. Top-line growth over the last five years has been driven by premium positioning, supporting like-for-like (LFL) growth as price inflation ranged from 3.5% to 8.3%, despite some volume fluctuations. Food accounts for 65% of revenue, reinforcing the segment’s position as a stabilising anchor for the group. We anticipate this premium positioning to remain part of WHL’s competitive advantage in the food space.

• Improving sales in the Fashion, Beauty and Home (FBH) segments: FBH remains a potential growth lever, with these categories focus on full-priced sales. This strategy has largely resulted in fewer discounts and higher price inflation, ranging from 6.0% to 11.6% annually over the last five years, which has slowed to 2.4% in FY26. Although Beauty and Home are seeing strong revenue growth, operating expenses have also increased, and inventory-control measures have recently weighed on operating profit.

• Potential recovery in Australian trading conditions and Country Road Group (CRG) turnaround: CRG is positioned as another potential lever for growth, although this has been constrained by the challenging macroeconomic environment in Australia. The segment recorded positive LFL sales growth and benefits from a higher online contribution to revenue of 27.8%. The operating-model reset has returned the segment to an operating profit from a loss in the prior period, but the operating environment in Australia remains a looming risk.

• WHL’s NTM P:E is trading at a 24% discount relative to both the five- and 10-year averages. The derating of the multiple may reflect the slower recoveries of the FBH and CRG segments which are less stable than Food. This presents an opportunity to gain exposure to a stable core part of WHL, with Food accounting for 65% of revenue with potential upside from a re-rating driven by turnaround strategies in the non-Food segments, although progress has been slower than the market initially anticipated.