Woolworths cops hit to food profits as customers trade down

Supermarket giant Woolworths has warned that its first-half profits will take a hit as customers continue to trade down to cheaper products amid the cost-of-living crisis.

While sales rose 4.5 per cent to $18 billion in the September quarter, the company said that the shift to specials and lower-priced products such as homebrands was hitting earnings in its food business.

Earnings before interest and tax from its Australian food division will come in at $1.48 billion to $1.53 billion in the December half, down from $1.6 billion a year ago, the grocery giant said in a statement to the ASX on Wednesday morning.

“Customers remain highly value-conscious and continue to purchase more items on special or trade down to lower priced items, including own brand,” said Woolworths boss Amanda Bardwell. “These competitive factors together with strong e-commerce growth is leading to a lower-margin sales mix, which has impacted earnings.”