Woolworths has reported a significant 16.4% rise in profit, helped by expanding its margins in its key supermarket business.
In its half-year earnings report released on Wednesday, Woolworths recorded an increase in underlying net profit to $859m over the six months to 4 January, up from $739m in the prior corresponding period.
Australia’s largest supermarket chain significantly expanded its profit margins during a period of reigniting inflation, with groceries and other household costs rising strongly again in the second half of last year.
The company’s results come ahead of a planned legal case brought by the consumer regulator against Woolworths.
The Australian Competition and Consumer Commission (ACCC) is alleging Woolworths and Coles misled shoppers by offering “illusory” discounts on hundreds of common products.
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The case against Coles, which is being heard first, began last week in the Victorian federal court.
Woolworths will be closely watching the proceedings before its own, very similar case brought by the ACCC begins.
The legal proceedings are putting a spotlight on the supermarket industry’s pricing practices at the same time as Coles and Woolworths attempt to mend reputational damage they suffered during the ACCC’s inquiry into the sector.
Sales at Woolworths supermarkets increased by 3.6% to $27.6bn during the six-month period, while its profit margins generated in the grocery business expanded from 5.1% to 5.5%.
Profit margins typically expand when the gap between the shelf price paid by shoppers and the wholesale cost paid to suppliers widens. Supermarkets also argue that they increase margins by improving efficiencies.
Coles and Woolworths are generally more profitable than almost all of their international peers, including Tesco, Carrefour, Sainsbury’s, Albertsons, Kroger Co and Ahold Delhaize, according to ACCC analysis.
The consumer price index, the government’s official inflation metric, rose 3.8% in the 12 months to December 2025, up from a 3.4% increase in the 12 months to November 2025.
Spending on food and non-alcoholic beverages contributed 3.4% to annual inflation in the 12 months to December, according to the Australian Bureau of Statistics, second only to housing.
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