👉 Background: Woolworths is Australia’s largest supermarket chain, with more than 1,100 stores across the country. The ACCC estimates Woolworths controls 38% of supermarket sales nationally, while Coles has 29%. But over the past 12 months, the gap has been closing fast.

‍👉 What happened: Now, Woolworths has warned that its underlying profits fell 17% to $1.38 billion for the last financial year, and Big W (which it also owns) slid to a $3.5 million loss. And after Coles’ glowing results earlier this week, it’s fair to say that investors were shocked by the Woolies results, bringing its share price down 15%.

‍👉 What else: Woolies’ CEO has promised to rebuild “price trust” with customers. The problem is that Woolies didn’t have a clear explanation for why its profit was down 17%... while Coles managed to grow its earnings.

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‍What's the key learning?

💡It’s one thing to deliver bad results when the whole industry is struggling - you can point to inflation, weak demand, or supply chain chaos. But there’s nowhere to hide when your direct competitor is thriving.  

💡Coles’ supermarkets EBIT rose 4.5% while Woolworths’ fell 10.5%. Woolworths’ market cap has fallen $15 billion since mid-2023 to $34 billion, while Coles’ market cap has grown $7 billion to $32 billion - a $25 billion turnaround.  

💡 So while Woolworths has promised investors of a turnaround, investors aren't currently buying any of their excuses.