Woolworths Holdings Limited (WHL) has sharpened its strategic focus around its market-leading Food business after delivering a resilient set of FY2026 results, with group turnover and concession sales increasing 4.3% to R84.5bn despite weaker consumer demand, higher operating costs and a more challenging second half.
Reuters/Siphiwe Sibeko/
The group reported positive sales growth across every segment for the full financial year, while adjusted earnings before interest and tax (aEBIT) and adjusted earnings before interest, tax, depreciation and amortisation (aEBITDA) both increased 2.8% to R5.3bn and R8.9bn respectively.
The results also enabled WHL to declare a final dividend of 81 cents per share, taking the total dividend for the year to 199 cents per share, up 5.9%, representing a payout ratio of 70% of headline earnings.
The performance comes against a difficult trading backdrop. Heightened economic pressure, weaker consumer demand, higher fuel costs and renewed interest rate increases in both South Africa and Australia constrained household spending during the year.
“The results reflect the resilience of our portfolio and the strength of Woolworths Food, [but] it is not where we want to be,” said Sam Ngumeni, group CEO of WHL.
“We are clear on the opportunities and the actions required to unlock greater value, and we are moving decisively to improve performance across the Group.”
Food remains Woolworths’ growth engine
The standout performer within the South African business was Woolworths Food, which delivered turnover and concession sales growth of 5.7%, ahead of the broader market, while continuing to gain market share.
Comparable-store sales increased 3.7%, supported by product quality, innovation and an enhanced in-store customer experience.
The division also continued to benefit from changing consumer shopping habits. On-demand delivery revenue increased 19.6%, with online sales now accounting for 7.3% of total South African food sales.
Despite elevated distribution costs linked to higher fuel prices, investment in the Midrand distribution centre and the growing online channel, Woolworths Food maintained its gross profit margin at 24.9%.
Profitability also grew ahead of sales, with aEBITDA increasing 6.1% to R5bn, while aEBIT rose 3.2% to R3.7bn, resulting in an aEBIT margin of 6.7%.
The performance reinforces Food's position as the central pillar of Woolworths' future strategy.
Fashion, Beauty and Home delivers mixed performance
Woolworths' Fashion, Beauty and Home (FBH) division grew turnover and concession sales by 4.4% for the year, with comparable-store sales increasing 4%.
However, trading momentum weakened considerably in the second half, particularly during the fourth quarter, as softer consumer demand and the impact of the war in the Middle East weighed on spending.
Within the division, Home was a notable growth driver, with sales increasing 11.7%, supported by an enhanced homeware offering.
Beauty sales rose 7.9%, despite increased competition, reinforcing Woolworths' position as a leading beauty destination in South Africa.
Online sales accounted for 6.3% of South African FBH sales.
The division's profitability, however, came under pressure. Price investment in Kidswear, increased promotional activity and the clearance of excess inventory pushed the full-year gross profit margin down 130 basis points to 46%.
aEBITDA declined 5.5% to R2.4bn, while aEBIT fell 14.1% to R1.4bn.
Woolworths said it has deliberately addressed excess inventory, leaving FBH with a cleaner inventory position entering the new financial year.
The Group's broader strategic reset will see Home and Beauty play a role as selected adjacent categories that can extend the Woolworths Food proposition into a broader lifestyle ecosystem.
Financial Services grows its contribution
Woolworths Financial Services (WFS) delivered book growth of 5.6% year on year to the end of June 2026, with management maintaining a focus on the quality of lending growth.
The tougher macroeconomic environment during the second half resulted in increased impairment coverage, pushing the annualised impairment rate to 7%, compared with 6.1% in the prior period.
Despite this pressure, WFS increased its profit-after-tax contribution to the Group by 5.6% to R228m.
Country Road returns to profitability
In Australia and New Zealand, Country Road Group (CRG) faced a similarly difficult consumer environment, with rising interest rates and weaker sentiment placing pressure on footfall and discretionary spending.
CRG sales increased 1% for the year, with comparable-store sales up 1.6%.
The Country Road brand traded marginally ahead of the prior year, while Witchery and Politix delivered stronger performances following the repositioning of the brands.
A deliberate focus on improving the quality of sales also supported profitability. Greater emphasis on full-price sales and reduced discounting lifted CRG's full-year gross profit margin by 130 basis points to 57.7%.
Combined with the lower cost base achieved through its reset operating model, this enabled CRG to return to full-year profitability, reporting aEBIT of A$2.3m.
Cash generation strengthens
Beyond sales and earnings, WHL highlighted a significant improvement in cash generation during the year.
Cash conversion increased to 104.5%, up from 82.5% in the previous period, reflecting a stronger focus on working capital management, cost control and cash discipline.
Return on capital employed improved to 17%, remaining comfortably above the Group's 11.2% cost of capital.
Headline earnings per share increased 5.3% to 282.3 cents, while adjusted diluted headline EPS rose 3.7% to 314.7 cents.
Woolworths resets for its next phase
The FY2026 results mark more than a performance update for Woolworths; they signal a change in strategic emphasis.
The group is now reorientating around its premium Food business, which management describes as its strongest competitive advantage and primary engine of brand equity and value creation.
Selected adjacent categories will support this core proposition, while the operating model and Executive Committee have been reset to strengthen accountability and execution.
A strategic review is also underway across the broader portfolio to establish a clearer role for each business, identify credible paths to improved returns and determine the appropriate level of investment.
The strategy comes as WHL enters FY2027 with continued uncertainty across its key markets.
“The situation in the Middle East remains unpredictable,” the group said, noting that although fuel prices and inflation have moderated from their peaks, consumer confidence and spending are expected to remain under pressure across South Africa and Australia.
For Woolworths, the next phase will therefore be less about pursuing growth across every part of the portfolio and more about concentrating investment and execution where the Group believes it has the strongest competitive advantage.
With Food delivering above-market growth, digital and on-demand channels expanding, cash generation improving and Country Road back in profit, Woolworths enters the new financial year with a clearer strategic direction — and a renewed focus on turning operational resilience into stronger returns.
