Woolworths incurs US$190M loss due to industrial action
AUSTRALIA – Supermarket giant Woolworths Group Limited has taken a rare $190 million hit to its profits following industrial action that disrupted warehouse operations and strained its supply chain.
The company, which operates in Australia and New Zealand and owns Big W, reported a 21 percent drop in its net profit for the six months ending January 5, bringing the total down to $739 million.
The decline was attributed to a 13-day warehouse shutdown caused by employee strikes, higher store wages, and shifting customer loyalty, the company stated in an ASX filing.
Woolworths acknowledged that the strike significantly affected its operations, leading to stock shortages in several regions. Chief Executive Amanda Bardwell emphasized the difficulties the company faced in recovering from the disruption.
“In Australian Food, the team has worked incredibly hard to recover from the supply chain disruptions caused by industrial action in November and December,” Bardwell said.
She further stated that while Victoria had not yet fully rebounded, store availability and customer satisfaction levels were gradually returning to normal. “While we acknowledge the material impact of the industrial action on our customers and team, we came to an agreement that is fair and sustainable and enables ongoing productivity improvements critical to maintaining competitiveness.”
The company clarified that without the industrial action, the drop in grocery sales would have been limited to five percent. The Australian Food earnings alone included a one-time $95 million cost due to the disruption.
Resolution of the strike
In December, Woolworths reached an agreement with the United Workers Union (UWU) after over 1,500 warehouse workers walked off the job in protest of wages and conditions. The strike led to reduced stock availability across Victoria, ACT, and parts of New South Wales.
A company spokesperson confirmed that the distribution center in Dandenong South, Victoria, could reopen following the union’s endorsement of the new enterprise agreement.
“With just over two weeks to go until Christmas, we’re now focused on getting products out of the distribution centres and restocking the empty shelves customers have experienced in the past fortnight,” Bardwell said at the time.
The UWU stated that the strike primarily addressed concerns over Woolworths’ performance management system, which tracks warehouse workers’ productivity levels.
Although Woolworths has moved past the immediate crisis, it continues working to stabilize its supply chain and rebuild consumer confidence after the disruption.
Looking ahead
Bardwell warned that the company would continue feeling financial strain as consumers remain cautious with their spending due to the ongoing cost-of-living crisis. She noted that customers were increasingly seeking budget-friendly options and shopping around for better deals.
“While we continue to optimise our promotional activity, cost-of-living pressures for customers persist with value-seeking behaviours and cross-shopping expected to continue,” she said.
Additionally, rising livestock costs for red meat are expected to add to financial pressures in the first half of 2025. In response, Woolworths said it would focus on offering better deals, including improved promotional strategies and clearer price tags to help customers spot discounts more easily.
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