This report does not constitute a rating action. MELBOURNE (S&P Global Ratings) Feb. 26, 2025--Ongoing discounting in Woolworths' Australian supermarket operations will constrain EBIT margin improvement in fiscal 2025. Remaining competitive on price is fundamental to the market position of Woolworths Group Ltd. (BBB/Stable/A-2). The group faces stiffer competition from rivals amid tough operating conditions, characterized by increased regulatory pressures, weakened consumer sentiment, and higher demand from value-seeking consumers. The Australian food division's reported EBIT margin, excluding industrial action and supply chain operating costs, declined to 5.7% from 6.1% in the fiscal 2025 first half (ended Jan. 5, 2025). A combination of stock loss, wage inflation, an increasing contribution from lower margin e-commerce sales, and discounting contributed to the decline.
