Bulletin: Woolworths Reaps Benefits Of Stable Operating Conditions

This report does not constitute a rating action. MELBOURNE (S&P Global Ratings) Feb. 22, 2023--Stabilizing operating conditions are helping normalize profit margins for Australia-based Woolworths Group Ltd. We expect a shift back to "at-home consumption" to further benefit the retailer, as cost-of-living pressures crimp consumer discretionary spending through 2023. Less severe supply chain disruptions and reduced COVID-related costs underpinned an increase in group EBIT of 18.4% during the six months to Jan. 1, 2023. Importantly, group EBIT margins improved to about 4.9% from 4.3% at the same time the prior year. Nevertheless, we expect earnings to be pressured over the next 12 months as promotional activity remains an ongoing theme. Cost-conscious consumers will seek out cheaper products. Elevated transportation, and

...MELBOURNE (S&P Global Ratings) Feb. 22, 2023--Stabilizing operating conditions are helping normalize profit margins for Australia-based Woolworths Group Ltd. We expect a shift back to "at- home consumption" to further benefit the retailer, as cost-of-living pressures crimp consumer discretionary spending through 2023. Less severe supply chain disruptions and reduced COVID-related costs underpinned an increase in group EBIT of 18.4% during the six months to Jan. 1, 2023. Importantly, group EBIT margins improved to about 4.9% from 4.3% at the same time the prior year. Nevertheless, we expect earnings to be pressured over the next 12 months as promotional activity remains an ongoing theme. Cost- conscious consumers will seek out cheaper products. Elevated transportation, and labor costs, along with persistent supplier requests for price increases may also weigh on earnings margins throughout 2023. Woolworths' (###/Stable/A-2) key adjusted credit metric of S&P Global Ratings lease-adjusted...

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