Woolworths Builds Food Momentum Through eCommerce Growth and Value Investment

About Woolworths Group

Woolworths Group (ASX: WOW) is one of Australia and New Zealand’s largest retail groups, spanning supermarkets, business-to-business food and supply chain operations, discount department stores, pet retail and digital commerce. In this quarter’s result, the group’s performance was shaped by investment in value, fresh, convenience and execution, particularly across Australian Food, while customer loyalty, media and digital channels remained important growth drivers.

Australian Food remained the main engine of growth

The strongest part of the quarter was again Australian Food, where total sales rose 5.9 per cent to $13.828 billion. Within that, Woolworths Food Retail sales also increased 5.9 per cent, while sales excluding tobacco rose 7.3 per cent. Management said the improved momentum seen in the second quarter continued into the third, led by strong item growth.

That result was supported by several factors. Woolworths pointed to trade investments in Everyday Rewards, eCommerce offers, promotional activity and solid Easter trade, while also noting some temporary support from customers stocking up on pantry and household items late in the quarter. There was also a favourable comparison from cycling the residual impacts of industrial action in the prior year.

Customer metrics also remained stronger than a year earlier. Voice of Customer NPS for Store and Online reached 47, up from 43, while store-controllable VOC improved to 77 from 75. According to the operating metrics on page 4, comparable sales growth was 5.3 per cent, comparable transactions rose 1.9 per cent and comparable item growth rose 4.3 per cent. These are meaningful numbers because they suggest growth was supported by underlying shopping activity rather than just inflation.

Fresh categories were particularly strong. On page 5, the company said Fresh sales rose 8.0 per cent, with double-digit growth in Meat and Seafood as well as strong growth in Everyday Chilled. Grocery Food sales increased 9.8 per cent, supported by Drinks, Health & Wellness and Snacking. By contrast, Everyday Needs remained more subdued, although Home Essentials improved on the back of promotions. Tobacco sales continued to decline sharply, down 42 per cent on the prior year.

Digital and loyalty continue to strengthen the customer ecosystem

One of the clearest structural positives in the result is the continued growth of Woolworths’ digital ecosystem. Group eCommerce sales reached $2.7 billion, up 20.2 per cent, while within Australian Food, eComX sales grew 23.8 per cent. eCommerce penetration in Australian Food increased to 16.6 per cent from 14.2 per cent a year earlier. Delivery eCommerce sales rose 23.1 per cent and pick-up sales rose 24.6 per cent.

The digital channels are not just growing in revenue; they are becoming more embedded in customer behaviour. Average weekly traffic to group digital platforms reached 31.0 million, up 10.5 per cent year on year. Woolworths said the improvement was helped by better app search functionality and new digital tools such as Snap & Shop and smart baskets. On-demand delivery also continued to expand, with 47 per cent of delivery sales fulfilled within two hours, up 8 percentage points from the prior year, and on-demand delivery now available in more than 800 stores following the DoorDash partnership.

Loyalty remains a major competitive advantage. Active Everyday Rewards members increased to 10.7 million from 10.3 million, while tag rate edged up to 73.2 per cent from 72.9 per cent. Management said enhanced Rewards offers and campaigns drove record active members and stronger engagement. That matters because loyalty participation supports targeted promotions, data insights and cross-sell opportunities across the wider group.

Australian B2B remained steady and useful

Australian B2B sales rose 4.9 per cent to $1.508 billion. The main support came from B2B Food, where sales rose 9.6 per cent to $937 million. PFD grew 7.3 per cent, helped by strong quick-service restaurant demand, though Food Service growth became more subdued in March as customer caution increased. Export Meat sales surged 47.6 per cent, reflecting strong demand and higher export pricing.

B2B Supply Chain sales fell 2.1 per cent to $571 million, mainly due to lower SIW revenue from tobacco. Excluding tobacco, however, B2B Supply Chain sales rose 4.2 per cent, and Primary Connect’s third-party logistics business continued to show momentum. This suggests the B2B segment remains a useful support to group growth, even if it is not currently the main driver.

New Zealand was positive but more challenging

New Zealand Food sales increased 1.4 per cent in NZ dollars, or 2.1 per cent on an Easter-adjusted basis, to NZ$2.148 billion. The result was respectable, but clearly softer than the Australian Food business. Woolworths said the market remained highly competitive and consumer sentiment had weakened, while disruption from the new store operating model also affected performance.

Customer metrics in New Zealand softened relative to the second quarter. VOC NPS held at 40 year on year, but was down four points from Q2, while store-controllable VOC slipped to 78 from 79. Availability and eCommerce pick-up were disproportionately affected by the operating model changes. Even so, eCommerce sales still increased 6.8 per cent to NZ$334 million, with penetration rising to 15.5 per cent from 14.8 per cent. Everyday Rewards engagement also improved, helped by stronger member pricing activity.

Management has become more cautious on New Zealand. On page 3, the company said progress in the transformation will continue, but more slowly than previously expected, with higher fuel costs, lower sales growth and operating model disruption likely to leave second-half FY26 EBIT modestly below the prior corresponding period, even though full-year EBIT is still expected to be above FY25.

W Living showed resilient retail performance

W Living sales rose 4.8 per cent to $1.269 billion, helped by BIG W sales growth of 3.9 per cent and Petstock growth of 15.9 per cent. BIG W’s sales quality remained solid, with Easter-adjusted comparable sales up 0.7 per cent and total gross transaction value up 6.5 per cent. Clothing continued to improve, aided by better sell-through and RFID-supported availability, while Home also remained strong. Everyday categories were weaker, and management has already responded with the Big Price Drops campaign launched in April.

BIG W’s digital performance was strong. eCommerce sales rose 17.9 per cent to $112 million, while eCommerce GTV rose 30.8 per cent and penetration reached 17.5 per cent. Petstock also performed well, benefiting from acquisitions, new stores, solid comparable growth and stronger own-brand sales.

Outlook

Woolworths’ third-quarter result shows a business still executing well in its core Australian Food division while building out digital, loyalty and convenience capabilities that support longer-term competitiveness. The strongest signals in the update are the quality of Australian Food growth, accelerating eCommerce penetration, and continued customer engagement through Everyday Rewards. The weaker areas are New Zealand’s slower momentum and the more uncertain inflation backdrop, especially given management’s warning that higher fuel costs and secondary effects from Middle East conflict are likely to become more visible later in the year. Even so, Woolworths appears to be entering the final quarter of FY26 with solid sales momentum and a continued focus on value, productivity and customer retention.