‘Full extent of the financial impact is unknown at this stage’: Woolworths sales losses have tripled initial projections
Woolworths has posted a grim ASX update showing the financial impact of a 17-day strike at its distribution hubs.
The strike ended over the weekend, as the supermarket and workers agreed to individual enterprise agreement offers that guarantee team members a wage increase of approximately 11% over three years, and the relaxation of strict performance metrics that had workers complaining they were being treated like robots.
Woolworths reported to the market on Monday that grocery sales were impacted by approximately $140 million in total, close to triple the $50 million in losses the supermarket reported in a December 3 update.
The estimated direct one-off negative impact of this dispute to date on Australian Food EBIT is approximately $50 – 60 million, “reflecting the impact of lost sales, additional transport and supply chain contingency costs and elevated levels of stock loss”.
Further to this, Woolworths anticipates “further sales and earnings impacts” until the end of 2024, “due to the time and effort required to rebuild stock levels at both the distribution centres and stores ahead of the busy Christmas trading period”.
The group will provide a comprehensive update at its half-year results presentation in February, but warn “the full extent of the one-off financial impact is unknown at this stage”.
Woolworths Group CEO, Amanda Bardwell said: “We are pleased to have endorsed offers and a competitive wage for our team at the four distribution centres subject to industrial action over recent weeks.
“With just over two weeks until Christmas, we are now moving products out of the DCs and onto supermarket shelves as quickly as possible for our customers. We are fully focused on restoring stock levels and getting products to stores where they are needed most, with stock levels to gradually improve as we seek to provide customers with a great shopping experience this Christmas.
“We would once again like to apologise to our customers for this disruption and thank them for their support. We know it has been frustrating shopping in our stores and online in recent weeks in Victoria, the ACT and parts of NSW. I would like to sincerely thank them for their understanding and patience.”
While Woolworths is struggling to stay afloat, Coles has a more positive challenge on its hands, with Coles chief commercial officer Anna Croft writing to suppliers to warn that order volumes and staff numbers will be increased in the race to fill the Woolworths deficit.
“We’re focused on delivering for the customers and communities that depend on us. As we respond to increasing demand, it’s essential that we continue to communicate and work together, especially with seasonal trade now underway,” Croft wrote in the note, via The Australian.
“We are uplifting our order volumes into our distribution centres and prioritising stock deliveries to our most affected stores. To further support these efforts, we’ve increased team member presence, both in our distribution centres and stores, to ensure strong product availability for our customers.
“We recognise this is an evolving situation and appreciate your ongoing support. We ask that you continue your efforts to maintain, and uplift supply, and direct your representative resource into our Victorian stores.”
Keep up to date with the latest in media and marketing
Got a tip?
Nathan Jolly is the Features Editor at Mumbrella. He joined the team in July, 2023.
Linkedin
Was there any acknowledgement in the apology to customers, why the workers went on strike, so we could balance the spin a little?
User ID not verified.
Have your say