Woolworths Group Limited (WOW) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by, and welcome to the Woolworths Group F '26 Q1 sales announcement. [Operator Instructions] I would now like to hand the conference over to Ms. Amanda Bardwell, Managing Director and CEO of Woolworths Group. Please go ahead.

Good morning, everyone. Thank you for joining us today for Woolworths Group's first quarter sales results for the 2026 financial year. I'd like to acknowledge the traditional custodians of the land on which we meet today, Darug Country and pay my respects to Elders past, present and emerging. Joining me this morning are Stephen Harrison, our Chief Financial Officer; Annette Karantoni, Managing Director of Woolworths Retail; Sally Copland, Managing Director of Woolworths New Zealand; Amitabh Mall, Managing Director of Group eComX and Dan Hake, Managing Director of BIG W. I will begin by acknowledging that the group's overall sales performance during the first quarter remains below our aspirations. However, the changes we've made to improve our offer in areas that matter most to our customers, value, convenience and availability are being recognized with group customer metrics up on prior periods and an improvement in sales trends over the month -- over the last month. Group Voice of the Customer NPS increased by 4 points compared to the prior quarter and 3 points compared to the prior year, driven by improvements in Australian Food and New Zealand Food. We are focused on rebuilding momentum in the short term, but are also clear on our longer-term strategic priorities, which we laid out in August, and we've continued to make progress on these priorities during the quarter. Now turning to performance by business. In Australian Food, total sales increased 2.1% and Woolworths Food retail sales, total sales increased by 3.8%, excluding tobacco, supported by e-commerce growth of 12.9%. While customers are recognizing the improvements we are making, we know there is more to do to improve sales momentum in Australian Food. In September, we uplifted our investment in rewards and e-commerce offers and weekly promotions on key family lines like Nappies, Bananas and chicken breast to provide customers with more value and more reasons to choose Woolworths first. Item growth showed a modest improvement over the quarter, but this was offset by an increase in deflation in fruit and vegetables in the latter part of the quarter. By category, growth in fresh and grocery food was solid, while pet, baby and Home Essentials continue to underperform in store, reflecting a competitive market and a need for us to improve our customer offer. Average prices ex tobacco in quarter 1 were down 0.3%, marking the seventh consecutive quarter of lower prices for customers driven by deflation in fruit and vegetables as a result of increased supply on key lines like berries and avocados, partially offset by higher meat prices, which continued to be impacted by rising livestock costs. Long-life categories, including pantry, snacking, freezer and everyday needs remained in modest deflation during the quarter. We know our customers want reliable, lower shelf prices every time they shop with us, and we added over 100 products to the shelf price, bringing the total to over 750 everyday items. These lower prices are resonating with our customers, reflecting in double-digit unit growth across the program and improvements in value for money book, up 5 points compared to the prior year and 3 points compared to the prior quarter. In eCommerce, growth in convenient on-demand proposition was the highlight, with e-commerce sales delivered or picked up in under 2 hours, increasing by 39% as customers continue to value the increased convenience. Cartology revenue grew 4.6% albeit at a lower rate compared to prior periods due to cycling several successful promotional events in the prior year. Everyday Rewards and services sales growth was driven by everyday mobile and insurance with combined customers growing 5%. Active Rewards members in Australia increased by 4.5% compared to the prior year to 10.5 million. In Australian B2B, sales increased by 6.2%, driven by B2B food with growth in PFD and export meat sales. In PFD, growth to food service and QSR customers remain strong. B2B supply chain sales declined on the prior year, reflecting the impact of a decline in tobacco sales on statewide independent wholesalers in Tasmania. Third-party supply chain sales through PC+ increased, reflecting solid growth in international logistics and an increase in new and existing customers using our cross-dock warehouses. Sales momentum in New Zealand improved over the quarter as competitor activity normalized with total sales growth of 3.2% driven by strong eCommerce growth and successful promotional campaign. Customer metrics in New Zealand continued to strengthen on the prior year with improvements in value for money and fruits and vegetables with metrics stable on Q4. eCommerce sales increased by 15.8%, with penetration reaching 16.8% driven by strong growth in convenient on-demand e-commerce propositions like MILKRUN and Direct to Boot. Everyday Rewards sentiment and engagement in New Zealand also continues to strengthen with customer advocacy up 11 points and active members increasing by approximately 260,000 compared to the prior year. In BIG W, total sales, including the BIG W market, increased 1% with a more favorable sales mix, reflecting an improved performance in clothing. BIG W's gross transaction value, including BIG W market, increased by 5.7%, with strong 3P growth. Sales in the quarter reflected a higher proportion of full-price sales supporting improvements in range quality and availability of summer stock, favorable weather and cycling significant winter clothing clearance activity in the prior year. As well as an improved performance in clothing, we saw solid growth in Play and Home. However, everyday sales remained challenged with a decline in cosmetics, party and everyday essentials in a highly competitive market. BIG W eCommerce sales increased by 12.3%, primarily driven by the inclusion of BIG W market sales growth, reflecting the decision to integrate the marketplace and leverage the significant digital traffic in BIG W. eCommerce GTV increased by 46.3% with 1P eCommerce sales growing 6%. Pet stock sales increased 15.8%, largely driven by the opening of 6 net new in-quarter stores and the acquisition of Big Dog and Time pet following the exercise of convertible notes. Comparable sales increased 3.9%, supported by value reset, increased marketing and solid own brand and e-commerce growth. With only 8 weeks until Christmas, we're determined to give customers every reason to do their entire shop with us that will work. We have strong plans in place to deliver a fantastic festive season for our customers starting with Halloween this Friday with much to look forward to, including a refreshed Christmas seasonal range, which we know our customers will love. Woolworths Food retail sales in quarter 2 to date have increased by 3.2% or 5%, excluding tobacco, as we continue to focus on rebuilding momentum. Looking ahead, we are cautiously optimistic about our key trading quarter and remain focused on getting back to our best. It will take some time to see the full benefits of our strategic actions to be realized, but we remain confident the steps we are taking will lead to meaningful improvements for our customers and importantly, our shareholders. I will now turn over the call to the operator for questions. To give everyone a chance, can I please ask that you limit it to 1 question per person and then rejoin the queue with any follow-up questions. Thank you.

[Operator Instructions] Your first question today comes from Adrian Lemme with Citi.

Amanda and team, I was just interested in that commentary on October. Is it a softer comp than what you saw in that September quarter? And can you clarify, you're seeing the improvement coming from online given all the bonus points offers we've seen? Or is it mostly coming in, in store?

Yes. Thanks, Adrian, for that question. So when we look at the year-to-date, I actually think about it really in 3 phases. So maybe just to start there. So firstly, as you know, the first 8 weeks were well below our aspirations. Then when we look at those weeks really 9 to 14 certainly, what we saw was an underlying improvement in items, underlying steady improvement in transactions, but somewhat offset by the fruit and vegetable deflation. And so you see that in our results. We also have seen, as we've reported our quarter 2 sales, a steady, modest improvement in items and transactions as we've come into the quarter. And that's what we're focused on. We're focused on building sales momentum. It's the critical quarter for us. We're really excited about the plans that we've got in Australian Food as we come into Christmas. And we're asking our teams to be really focused on bringing the very best of Woolies to customers this Christmas. So it's been a steady, I would say, modest improvement that we've seen across the quarter and into the second quarter.

I think I'd just add there's not much difference in the base that we're cycling over between Q1 and the start of Q2 last year.

No.

That's very helpful. And just to be 100% clear, you're not seeing any material difference in terms of the online business in-store trends that you saw in the September quarter into October?

Yes. Thanks, Adrian. I would say some micro improvement actually in terms of our store performance if I was to call anything out. Both online continues to be a really strong performer for us obviously driving a huge proportion of our growth. What we've been pleased to see and I wouldn't want to overplay this, it's very, very early days, but a modest improvement that we're seeing in our stores performance as well. We'll continue to focus on that.

Your next question comes from Michael Simotas with Jefferies.

Can I just follow on from that question on the October trading update. I guess just a little bit wary that it is such a short period. I think it's 3 weeks. You sort of talked about investment in loyalty, et cetera, in the month of September. We've also sort of heard some feedback that some of the categories have seen stock weighting uplifted a little bit to address some of the availability issues. Do you feel like there has been a little bit of a positive step change in the business in October? And is that relative to the broader market? Or is it just too short a period to tell?

Yes. Thanks, Michael, for the question. So let me just start by saying we said we would take action when we last connected in late August, and we had a lot of that has been focused on improving our customer engagement and uplifting our offers. So you're right to call out certainly a focus on loyalty on some of our promotional activity, but also some targeted activity around availability as well. That really didn't start to flow through until late in the quarter, so mid- to late September. And what we're calling out is really a modest improvement as a result of all of those actions that we're seeing. I too would want to just reinforce your point, which is it's very early days, but we are pleased with what we've seen in terms of the customer response to those activities. It gives us something to continue to build on as we head into the critical quarter for sales in quarter 2. So we're very focused on that. And our team's response as well has been excellent. And so yes, I would say early days, but some early signs of progress being made.

Your next question comes from Tom Kierath with Barrenjoey.

Amanda and team, I've got a question on the promotional environment. I think in the release you're saying with reference to Cartology that there was a lower rate of growth due to cycling several promotional events in the quarter, including the Olympics. It'd just be interesting if you could maybe give us some color on the promotional environment. And it looks like you've kind of maybe moved away a little bit from collectibles or funding that as well and then maybe a bit more into the rewards programs and the kind of loyalty in the point side. But just a bit of, I guess, clarity on that would be really helpful?

Yes. Thanks, Tom. Just to pick up on your question on Cartology. What we're calling out there is the sales growth that we have shared is -- just lower than what we've seen in recent times. And that's a case because of really a couple of things. One is the Olympics that we called out. And the other is the Disney program. It didn't perform to expectations overall. And so there has just been a year-on-year comparison slightly softer promotional program for Cartology to be able to work with our supply partners on. So that's what you're seeing there. When we look at the promotional activity overall, we said that we would take action in terms of building sales momentum. We said we were certainly not satisfied with the results that we've delivered in terms of sales. And so we absolutely did through mid-September and continuing went back and had a look at have we got the right balance in terms of our Everyday Rewards activation. And so first and foremost, you will have seen more visibility around everyday rewards in our stores and online. And that's about making sure that customers and members more broadly are aware of offers. And so we did the all member offer on point split, for example, which requires you to scan and you then get those additional benefits. We also have uplifted some of our personalized offers as well. But we wanted to really improve the value that we're providing to customers and members through everyday rewards. We have also reviewed all of our promotional activity across Woolworths retail. And then the last and certainly not least, we've increased the generosity of our e-commerce offers. We want to make sure that when customers are thinking about value they're really thinking about it in terms of, as we know the product price, the promotions, but also all of the other value that they're able to capture from Woolworths, whether that be through loyalty or through other customer acquisition offers. And so we've taken that action. We're pleased with the early results in terms of improved engagement from customers in various different ways. So if you look at our Everyday Rewards program, some nice improvements in terms of boosting numbers, digital traffic, so engagement continuing to improve. Some of that has translated through into some modest improvements we've called out in terms of item growth and transaction growth. And so we're very focused on making sure that we just continue to build that as we look to the sales quarter that counts the most, which is quarter 2.

Your next question comes from David Errington with Bank of America.

Amanda, look, Amanda, I'm a little confused at the moment. And I'm confused because I want to believe that the business is resonating with customers, with your voice of customer. I want to believe that you're starting to get more traction, but then the lag, if you like, and the numbers just aren't demonstrating that. And where I'm going with this is when you talk your item, your comp item growth this quarter was 0.5%, your comparable transaction growth was only 0.1%. The volumes are really, really down. And I just listened to you answering Tommy Kierath's question then, when you're really putting a lot into everyday rewards, you're really putting a lot into these offers. Now I do a lot of shopping. I do. I don't take my everyday rewards card. I just want the lower shelf price, and Coles has a high low or they are the lower shelf price. You guys have got to go through this everyday rewards thing. And I'm just confused. I think that this feedback that you're getting from your existing customer base might be pleasing, your existing rewards might be pleasing, but new customers are not coming back into the store. So can you give us a bit of an idea as to why this disconnect between actual performance and feedback from your customer base? Because that's the bottom line. Why is there this disconnect? You're getting positive feedback. We like to believe it, but it's just not resonating in the numbers. And I'm really just -- I'm confused as I've ever been.

Okay. Well, thank you, David, for that. And thank you for shopping with Woolworths. I'm going to assume that, that was Woolworths that you're shopping at and referring to there. Yes, let me just take a step back and say what we're calling out is very modest early signs of improvement. And I certainly don't on this call want to suggest anything other than that. And yes, you're absolutely right. We have got a strong customer franchise of customers that are reporting consistently better experiences that we're tracking through the 60,000 voice of customer surveys we do each and every week. However, it is also the case that we need to continue to improve our reach across the broad grocery customer base. And so yes, I did talk to everyday rewards and loyalty there. So you're right. What we did with that is make sure that we uplifted it and made it more visible for those people who perhaps it's not front of mind for in terms of everyday rewards and the value that you can capture from that program as a customer. But we also recognize, and I agree with the point you make, which is we need to appeal more broadly in terms of value and making sure that customers are aware of that value. And so across certainly, September and into the Christmas quarter, you should expect to see from us a more visible offer, whether that's through the traditional catalog, for example, bringing to life the product and price offers. Continuing to improve the promotional program that we have available. So key lines that really matter particularly for families at great prices and making sure that we have the stock weight that's required to be able to sell those products right throughout the entire week. So just to summarize and come back to your overall point, yes, we've got a strong franchise of existing customers that have continued to deliver better customer experiences, but we've also got an uplift that we need to do in terms of our broader reach of customers and that's what we've done.

Yes. That seems to be the point the broader reach. And if you can get that broader reach in this quarter, you're setting yourself up for a pretty good second quarter. So all power to you, if you can pull that off.

We are -- I can just say we are hyper-focused as a team. I'm just looking at Annette here across the table. We are very focused on that. We've had some great events with our team over the last month as we bring forward for them out what we've got planned for Christmas. Store teams are feeling well supported. Our commercial teams have now settled in with their new leadership structures, and we are hyper-focused on making sure we bring the absolute best of Woolies this quarter.

Your next question comes from Shaun Cousins with UBS.

Question is just regarding nonfood share loss. I think you've called out Baby, Pet and Home Essentials are still weak. Could you talk a little bit about the changes that Woolworths has embarked on to address the share loss in nonfood? And is it fair to say that you're still losing share in that category? Or do you think you've gone some of the changes you've made have gone some way to holding share loss, please?

Yes. Thanks, Shaun. And yes, we continue to need to focus on those everyday need categories. Absolutely. They're a part of our offering that certainly not performing to expectations, and we need to continue to do a lot of work on. If I just talk about a couple of those categories, and Annette, I'll throw to you in a moment. Just when we take the pet category, there are a number of areas here where we can and should do better. And so when we look at our price competitiveness, particularly in bulk range in dry dog food, for example, we know that, that's very competitive, particularly with some of the recent entrants into that market. We've taken the opportunity to sharpen up our unit pricing there. In Baby, there is a number of challenges we had in the quarter with own brand nappies availability. But certainly, we have focused there and just being more competitive. I mean young families for us are such an important customer base. And so as we've looked at what do we need to do better, that's certainly been an area of focus for us. And so as we have looked at the performance of the business overall, there has been a series of actions that we have taken that are live in the market. And then there really is a much larger, more ambitious reset that needs to happen across those categories in terms of the offer, which we'll progressively show through over the next 6 to 12 months. But Annette, I know that's an area you're very focused on. Anything else you want to add there?

I think that's right, Amanda. I think the solve for some of these categories where we'd like to see improved performance. It's really -- you have to operate in multiple horizons. So there's a very immediate piece of work being done, as you've mentioned, around the pricing and the products that are on the shelf and availability of those products. And in baby, we had a very good launch of Millie Moon earlier in the year. But really, we've amplified that activity in the plan that sits around baby albeit we have had some challenges in availability. But what you'll see in the new year as we come in to some plans that have been underway for the last few months some improved product, some rebranding of some packaging. And you'll actually see us reset the baby category. So you really have to operate on multiple horizons. And as you've mentioned, very similar in Pet. We've now -- we've had a really great level of success with some of these bulk products on LST, our lower shelf price program with things like pedigree and 8-kilo dog food product that's now as a bulk product sort of sitting just above $3 a kilo and our customers are really taking advantage of that really great bulk wealth value and those larger pack sizes are certainly something that we hadn't been focusing on in the past. And again, new products coming in, in the cat category this side of Christmas, but actually in the new year, you'll start to see some of those things shift in the dog category. So I think it is a multi horizon. You have to be able to operate and drive the business in the current quarter, but we've also got to be building the plans into the future. So very big focus for us.

Yes. And I think great to see also the Tilly, the cat food range coming in from Petstock into the Woolworths retail offer as well. And so that partnership with Petstock being able to access some of the really great own brands that they've developed there is also pleasing to see.

Yes. And more to come in the new year. I can't speak to them on the call specifically. But in February, you'll see some of those things happening in the dog category as well. So very excited about what's coming. And I'd say very similar in Personal Care. It's another category we're very focused on. We've had some really great launches this year with Treehut, and some of these innovative categories that our next generation of consumers are really coming into our stores and actually asking for before they even hit the shelves when they hear that it's coming, we'll continue to do those things and very similarly shape the category into the new year.

Sorry, just to be clear, so you think you're still losing market share, but you've got a plan to fix it. Is that -- you've outlined a lot of detail around short and sort of medium-term horizon about how to address it, but is it fair to say that you're still losing market share?

Yes, I think it's fair to say that we've got a lot of share is -- we've got a lot of work to do. We're seeing an improved -- very slight improvement in our performance as we've taken some of these actions. But let's be frank on this call, we've got a ways to go when we're focused on that. We haven't -- we're not calling, but we're satisfied with where our share position is or has been.

Your next question comes from Caleb Wheatley with Macquarie.

Amanda and team, just a bit of a follow-on from some of the prior questions, but more specifically around cross shop. Some of the data we're seeing looks like a lot of that market share shifts over the past 12 months or so have been related to that cross shop between you and your largest competitor. Any comments that you can make on what you're seeing on the cross shopping front either through the first quarter and into the Q2 trading update today, please?

Yes, thanks. Let me talk about cross shopping to start with, and then I'll just share a little bit to what we're hearing from customers as well. So in terms of cross shopping, we're sitting at all-time record, I'd say, this time last year. What we've seen is a slight easing of level of shopping actually across the market overall. So I'm not talking about any one particular competitor. It's a very broad market as we know now, for groceries in particular. So we've actually seen it come down and stabilize. So that, from our perspective, is obviously pleasing to see. If we talk to customers as we do regularly in research and focus groups, we continue to hear a large portion of customers would report that as cost of living eases as they look forward to that, they will also look forward to reducing the amount of cross-shopping that they're doing. Now we haven't seen that dramatically show through today other than the reduction I called out just earlier. But that's certainly a very strongly held view from customers as they look to save time as cost of living pressures start to ease. And then we're very focused on quarter 2 in sales right now. We're also being very curious as to where our customers are in terms of their sentiment overall. And we're also pleased just to hear that there is an increased level of optimism around Christmas this year. So as we've been tracking at those levels of excitement and looking forward to sentiment from customers has been increased on this time last year. And in fact, they're also calling out that they would like to spend a little bit more time cooking and celebrating with friends. And we're looking to do that in a very modest way. I don't want to call that we're seeing a very large swing here, but certainly compared to where we were in the last couple of years. There's a definite uptick in customers looking forward to Christmas. Customers reporting they'd like to cross shop less when cost of living pressures ease. But of course, the market has changed a lot over the last 5 years. And so we know we've got to bring a better offer for customers so that they continue to choose us first. And we've shared today, we've made some adjustments over the last quarter, but we've got a lot more work to do to continue to improve that.

And to be clear, that slight easing for the year by fiscal year-to-date? Or has that really started to ease in the second quarter so far?

That's actually over the last 6 months, we've seen a stabilization of that with customers then reporting that they would like to decrease. We need to see that happen. So to summarize, I would say, it was at record levels this time last year. It's reduced as we've come into the calendar year, stabilized and now we have customers also reporting that they would like to reduce the level of cross shopping and save a little time. We haven't seen that.

Your next question comes from Bryan Raymond with JPMorgan.

My questions back on sort of availability and just particularly around inventory and labor. I just wanted to understand that given your flat in-store sales profile at the moment, supply feedback does indicate that availability levels have dropped year-on-year, and there's been some action taken as you've highlighted. But just want to understand the drivers of it and the way to fix it given what we understand DIFOT levels, et cetera, are sort of back to normal generally. Is it in-store labor hours? Is it how you're planning your inventory and promotions in categories? And then just can you get it back on track for Christmas is the key factor that we're all trying to work out?

Yes, just let me just start with your last point. That's absolute intention to be on track for Christmas. So from an availability perspective, if you call out, Bryan, it's overall, if you look at our national numbers, whether it's on store service level, whether another measure that we use, which is availability or yet another measure we look at, which is actually on first half pick for eCommerce. All of those are solid. However, as you look then at the detail of how individual stores are behaving there is opportunity for us. And so we have made a number of adjustments, as you say, to our settings when it comes to availability. So first and foremost, an upweighting of promotional stock on key lines in particular. And that's based on feedback that we've been receiving from suppliers and some of our store teams as well. So we have made adjustments there. We also have taken the opportunity to look at some stores in terms of the hours that they need to be able to keep promotions on show. And that's particularly for some of our higher promotionally indexed stores who are trading very strongly. And so we've made some adjustments there, and we'll continue to look at that as we move into really the critical, critical time for us with Christmas. And then Annette, are there any other call-outs you would make on availability?

The only other one, well, probably two, Amanda, there has been some challenges in our meat business. And it's a bit of a combination of a couple of things that the constant increase in livestock prices did have a thinking that the consumption of meat would actually come back and it actually hasn't. And so we've readjusted our livestock plans, and that will definitely solve well before Christmas, which is pleasing, but it's not quite where we like it to be. And the only other thing I would say, and I think that Bryan mentioned is we are constantly looking at our hours in stores to make sure that we have the right amount of hours to make sure we're filling our product and in particular [indiscernible].

Yes. yes. And then the other, which is more category specific, as you say, would just be the demand we're seeing in some categories. And I know that you reported earlier this morning as well, just if you take protein yogurts, for example, just the volume there in terms of double-digit unit growth, it's just incredible, is continuing to present some challenges in the chilled category. I know for us, but that's more of an industry-wide challenge.

Your next question comes from Ben Gilbert with Jarden.

Amanda and team, just on the comments around promotions and promotional effectiveness in the below the line and then the above the line, have you actually step changed versus your plans say, 6 months ago, 3 months ago from what sort of kick started this sort of improvement in October? And if that's the case, are you seeing a greater return on investment from promotion? And do you then lean into that a bit more aggressively to get the traction back?

Sorry, Ben. I might just need you to repeat that question for me. It was breaking up.

Apologies. Just in terms of the comments you made, how you've changed a number of things in terms of planning around promotions below the line and above the line, and we're seeing some early signs of that in October. Is that a step change from where you were thinking 3 and 6 months ago in terms of dollar spend. And with that in mind, if you're seeing a higher return on investment around promotions, do you lean into that more aggressively now into Christmas to really get that momentum back into Christmas and kick start into the year for '26?

Yes. Thank you. Thanks for that question. Yes. So from above-the-line perspective, we've been really pleased with the activity that we have overlaid into our plans. It just brings more visibility for members around the value that you can get back, but also the value, obviously, that they're earning as a result. And as we know with our loyalty program, that comes back into our stores as they choose to burn those rewards points. So we've been happy with that, and it is a step change. So you're right to call that out. I think Annette and the team are very much getting in and behind our Everyday Rewards, loyalty program. And then with the below-the-line activity, we have been improving our personalization capability here. And so as we've adjusted activity certainly in this quarter, we've also been unleashing some of that new capability that we have in the one-to-one space. And creating more value for customers but also giving our supply partners more opportunities to be able to partner with us in this space as well. When we're thinking about value, we just want to come back to the point that David made overall, which is we're looking at value from a shelf price perspective. We're looking at the loyalty and the rewards program that we can offer, and we're really pleased with the results that we've seen recently from everyday rewards, but we're also conscious of the marketing activity needs to be broadly accessible. And so making sure that we're in all the right places, whether that be the catalog, the digital YouTube TV, et cetera, is incredibly important. And so we certainly intend to be very present for this quarter ahead. It's about balance and getting that balance right.

And are you seeing it resonate with the main shoppers because it seems like there's a lot of meat like poultry, there's some big basket activations that are coming through. And I don't think we less had a traffic issue at all, sustained a type of shopping doing that main shop. Are you seeing any green shoots around the main shoppers or the big shops?

Yes. So we certainly have been very focused on what are the lines that are going to matter most to families. And have we got the right shelf prices, have we got the right promotional pricing and then have we got the right incentives Everyday Rewards. And so some of those key lines that you call out are really important basket builders for us. And so we've been very focused on that because we do want to continue to see those early signs of improvement, very early days in terms of transactions and items into store. We want to see that continue to build, and that's obviously part of our plan to be able to deliver against that.

Your next question comes from Craig Woolford with MST Marquee.

Amanda, you've had a strong emphasis on this customer trust, your voice of the customer scores as a prerequisite for better sales and that has now improved. But the first quarter sales trends softened even if we look at volume metrics like transactions. So just interested, would you list other factors other than trust that you need to see improved in order to see better sales growth?

Yes, absolutely. So let's just start with -- for us, even the lower shelf price program for us is a good litmus test of exactly that and what we're seeing, the lower shelf program is actually double-digit unit growth coming from that. So that for us is a real indicator of some of those actions that we've taken absolutely resonating with our customers. When it comes to the sales trajectory across the quarter, I mean, again, just to be really clear, well below our aspiration. So it certainly wouldn't say anything other than that. What we've seen though is an improving underlying momentum when we look at things like items across the quarter. And so that's what we're particularly focused on is item growth and of course then, of course, transaction growth as well. And when you look at it on a month-on-month basis, we have seen some very early, very modest improvement in terms of items across that first quarter and obviously into quarter 2. And so that's for us, is a key metric. When we're looking at quarter 1 sales, there's the back half, the impact of fruits and veg deflation, which does play through that. But again, I want to just be really clear, we do need to continue to be focused on transaction growth. We're very focused on getting better growth into our stores as well accompanied by e-commerce continuing to be a really important driver of growth for us as well.

So you don't see any other factors that need to improve? It's =the voice of the customer is there, but it just feels like there must be something else?

Yes. So in a broad context, if we just step back from the quarter, what we've also called out is there's the activity that we've undertaken to improve our sales momentum. And then we've also said, have we got the right products and prices in each one of our key categories going forward. And we've talked on this call about the fact that every day needs category more broadly is one that is underperforming for us. And that requires a combination of being sharper on some of our promotional pricing in the short term, but also there's a reset that's required around that range. Have we got the right bulk pack ranges in the pet area as Annette called out earlier, have we got the right offer for our young families in baby. And what we would say is there's opportunities for us to do that. And so you'll see some of those things start to play through across the next 6 and 12 months. And then there's also the fact that, as we've talked about on this call as well, availability, just that reliability of making sure that we've got the promotions available when customers are wanting them, including over the weekends and late in the afternoon. We want customers to be able to count on us. And it's that, when we're talking to customers who are looking at research, a lot of it is about Woolworths just being increasingly reliable. That's reliable on price, reliable on having the products there, reliable that eCommerce window is available when I want it. And they are the things that we know will see us continue to improve our trust scores, it's not any one thing.

Your next question comes from Richard Barwick with CLSA.

Amanda and team, I also had a question around online sales growth. So very, very strong this quarter, but it seems that you've called out some of the shorter turnaround I guess, options as the driver of that growth. And in the past, you had called out those options as probably being relatively lower margin. Is that still remain the case? Is that the way we should be thinking about the sort of mix within online sales?

Yes. Thanks, Richard. We certainly have called out the -- and I think it's quite extraordinary growth that we're seeing in the on-demand space. We've got 42%, 43% of our orders in delivery now that are in that on-demand space, growing rapidly. So for us, we look at that and it gives us confidence that certainly, that demand for speedy delivery is fast service is where customers are increasingly going. We also have seen some great growth, by the way, in our collections business. And so that for us is a particularly important part of our eCommerce offer overall and continuing to grow really strongly. And then from an overall sales call, of course, but just in terms of the way that we think about mix, the mix of sales and profit that we see from on demand. Actually, we're very pleased with the performance that we see there. It's got a different mix of products in it. It's serviced in a different way. And we're seeing an increasing number of customers actually increasing their frequency in their overall spend. So we're absolutely delighted to drive the growth of certainly our on-demand business. What we've done over time there is improve the productivity of that channel. We've done a lot of work to be able to be more efficient in the way that we pick those. So no, that's an important part. We want to win in that ultra convenience space. I'm just looking at Amitabh, anything else, Amitabh, you would add to that.

No, I think you said it well, Amanda. There is the convenience for the customers who really want to shop at short notice, which is what we are driving through on demand and the convenience in terms of place where people are very comfortable picking up from stores, which is actively driving that, which again, as you can imagine, is structurally advantaged from a profitability point of view.

So it's the pickup increase as well, which is a key, I guess, contributed to the margin mix?

As when -- while -- as we've reported, while online overall has grown at 12.9%, pickup in collections have grown at 19%.

Your next question comes from Phil Kimber with E&P.

Amanda, I just had a question on the Australian Food business. You've got a comment in Page 3. That says after a challenging start to the quarter, customer investment was increased. I just wanted to understand better I know it's a sales call, but you do have profit guidance out there. Was that effectively your plan the whole time to increase your customer investment across the quarter? Or was it more a reaction to weaker than what you wanted sales growth? And have you been able to sort of adapt costs on the other side to sort of try and match that increased investment?

Yes. So let me kick off on that one and then Steve, you might want to add to this as well. Certainly, what we said at the end of August, Phil, is that we needed to improve momentum that we were seeing in our Australian Food business and that we would be focused on building sales momentum, and that's exactly what we've done. That has required us to go back again and rebalance a lot of activities that we're doing across the business overall. But to make sure that we're putting investment in the right places. And so that has absolutely been the case with loyalty and some of our product promotions and marketing activity. Also has been the case when we look at availability and just making sure that in the late afternoon, over the weekend and into Monday, that we've got the right level of product available for our customers at some of the busiest times, certainly of the week. And so we have taken action on all of those things. However, we, on this call, have got nothing further to add in terms of our overall outlook that we provided with regards to profit. And so Steve, I might just hand to you.

Yes. Thanks, Amanda. I know you've been following the sector for a long time. Sales drives the economics of these businesses. So investments that drive sales can be good for the P&L. We gave some earnings guidance at the -- in August, with only 3 months into the year. There's nothing that we see that requires us to give any update to that. As you know, there's many levers in our P&L that we need to get right. We've got a strong cost discipline and delivering savings that we committed to and that remain on track for that $400 million savings. The team has talked to some of the mix impact on e-commerce, which can and should be positive. And we said in August, we're not happy with our stock loss performance. So we've got an ongoing focus on stock loss, all of which are levers that we need to manage in delivering both the top line and driving our sales momentum, which is the #1 priority as well as delivering the bottom line, which is also important for us and our shareholders.

Your next question comes from Michael Simotas with Jefferies.

Just keen to understand where you think you're up to with availability, particularly in some of those high turnover stores Sunday afternoon relative to where you need to be?

Yes. Thanks, Michael. We would agree we've got opportunities certainly and exactly as you called out, the high-volume stores and also some of our high promotional mix stores over the weekend and also in some stores late in the afternoon as well. We have taken a number of steps across the quarter to improve. Our overall availability metrics, again, at a national level are very solid. It's the detail in terms of individual stores that has needed to be addressed. And so we've done a number of things around upweighting some of our promotional stock way to the front end and also for some key stores that are very promotionally intense. We've got targeted activity across those stores also in terms of just the hours the team needs to be able to make sure that those products are available, and we'll continue to monitor and manage that, and make sure we've got those settings right as we head in now to 8 weeks to Christmas, absolutely critical to get that service level right. So we'll just continue to optimize that as we go forward.

But you still think you've got a little bit more improvement to make there?

We do. We can -- again, it's one of those interesting ones. You can look at the overall numbers. We really need to get into the very specific details store by store, hour by hour, and that's exactly what we have done. We've listened to some feedback from our suppliers as well and taken action, and we'll continue to monitor and see that, that is delivering the improvements. And if it's not, we'll adjust accordingly.

And your store teams have the tools and the ability to communicate where they feel like they have more gaps than they should?

They have -- sorry, just repeat that question.

Or do they have the tools to measure availability in their stores and communicate it through to head office where they feel like they're missing out on sales because of availability problems?

Yes, they absolutely do. And I can assure you they also share that both directly with us when we're out visiting stores in Hurstville and Roselands on the weekend and those stores are both very promotionally intense, and the store teams would absolutely raise that with us both in person and directly, but also through the various operations team, and we've made the appropriate adjustments there. They've got the ability to be able to manage the hours across the store. But also to recognize when they need to make the appropriate adjustments. And everyone in Woolworths is very clear, we're focused on driving sales and making sure everyone's got the tools available to them to be able to do that.

Your next question comes from Bryan Raymond with JPMorgan.

Just back on loyalty offers that stepped up in September and October. I just wanted to get your thought on the magnitude of that step-up and trying to put it in context on the mechanics of it from a P&L perspective, we're a bit different to a promotion, but is there a way you can quantify the amount points either issued or redeemed have increased and also how that flows through? Because I'm just trying to put into context of this mid- to high single-digit EBIT growth and whether this was all in the plan and kind of all on track, as Steve mentioned, it's too early to change that. But just trying to understand the magnitude of this change? Or is it -- how significant it is?

Yes. Look, Bryan, I wouldn't put a figure on it other than to say, we always, as we head into Christmas, do have an increased level of focus on loyalty and rewards points. We've got banks for Christmas coming up for our loyalty members as well. And so there has been an increased investment. But as you also call out, that means that members earn more, but they also are able to come and burn more in our stores. And certainly, Christmas is a favorite time for members to be able to do that. It's not just through banks for Christmas, but through burning off the $10 off and transferring to Qantas, if you happen to be part of that as well. So look, I wouldn't put a number on it, but we've already called out that we've got nothing to share with regard to the expectations we've set on profit guidance for the year.

Okay. And then if I can just sneak one in on just how do you guys measure success at Christmas, given last year was so disrupted, particularly in Victoria. Like what is -- what are your -- like how are you targeting that? Is it versus 2 years ago? Is it a share thing like I'm just trying to nest to give the exact numbers necessarily, but just from a strategic perspective, the focus is there. What is the metric you're looking at? And how should we be measuring it over Christmas?

Yes. Look, we're looking for continual improvement from where we are right now. So we do need to see overall improvements in terms of obviously the sales. We'll look at it, frankly, breaking it out based on states and regions because it was a very different Christmas in Queensland compared to, obviously, what we saw in Victoria and some parts of New South Wales. And so from our business perspective, with 8 weeks out now, we started our seasonal reporting, but we have also got reporting on the comparisons with the industrial action period as well just to make sure that we're really clear about like-for-like comparisons. So look, I wouldn't be able to share more than that. We see, Bryan, but yes, it does make it a little bit more complicated this year as you compare quarter 2.

Your next question comes from Craig Woolford with MST Marquee.

Amanda, I'm going to switch tack. I just want a question on BIG W. Just trying to understand the moving parts in its results -- sales results slightly positive. But the average item value looks to be up quite a bit because the average -- the items were down 3.8%. I know you talked about positive sales in apparel, but items to be down that meaningfully just doesn't look like a great sign. So I'm just trying to understand the moving parts on the BIG W business?

Yes. Thanks, Craig. I'll just turn to Dan to talk through that, as we've shared, we certainly have been pleased with the clothing performance, but I know there's some detail there, Dan.

Look, I mean, the main thing to say on ASP, Craig, is that this time last year, we had a lot of units go through the P&L, especially in Clothing through winter clearance. And so those items given an item lift last quarter and taken ASP for the business down, which is obviously a very expensive thing to do. This year, we've come out of winter much, much cleaner than that. And so we are seeing kind of inflation, basically, the ASP is up on that basis. That's not on the -- we haven't raised prices to drive that ASP increase. So we have kept prices very steady and competitive. It's really the cycling of clearance investments that's driving the large part of that.

And I think Dan, the other component that's worth adding is we are pleased with the start of the spring summer campaign and Clothing range and Home range. So we're seeing -- in terms of the mix of sales, more full-price sales than we saw last year. I think actually, we would say it's a healthier mix of sales. You're right, Craig, it is distorted and we have much more distortion on mix in BIG W than the other businesses in the group just because of the different category dynamics that exist. But the main driver is this health of the clothing sales that we're seeing.

Your next question comes from Richard Barwick with CLSA.

Amanda, my follow-up question is just actually harking back to one of the comments before. Effectively, you're saying that so correct me if I'm wrong, shoppers are telling you they want to reduce the cross shopping. And that's sort of their expectation as we move forward. Does that create some urgency now? So you -- if they're going to stop cross shopping, then you want them to be shopping with you now, so they're staying. Just in terms of -- yes, just some urgency and sort of lock that behavior in now if they're going to ease around -- ease back on the cross shopping, if that makes sense?

Yes, that absolutely does. And this is what customers are indicating they'd like to do, not what they are doing. So I just want to be clear on that, too. But absolutely, and that's as we've talked on this call today, we have been really focused on sharpening up our offer every day in stores right now across the board. And at the same time, really going back systematically through each one of our categories and making sure as quickly as possible. We've got better ranges available in some of those key categories where we've shared we are underperforming, and we need to do better on. We're also making sure that, when customers come and shop with us this Christmas and particularly in places like Victoria, which was so deeply disrupted last year, we want to make sure that they have a great experience. And so making sure that we've got the right team available to be able to provide that service is a big focus for us, absolutely. And we want to see both our loyal customers, which we've got a very strong franchise around to continue to shop with us, add more items to their basket and so to be able to grow that. But we also think we've got an increasing opportunity if we get it right, to be able to have some of those customers who might not have shopped with us for a little while, shop with us at Woolworths.

I was going to say, part of my question is really around the urgency. So maybe if I rephrase it and said, like all the changes that you're talking about and that you have made and you are making, do you feel like the changes are being made quickly enough with enough urgency, to get them in place?

Yes. Yes, let me -- the changes that we can make in the short term, yes, I could not be more pleased with the changes that the Woolworths retail team have been making over the last couple of months and the plans that we've got for Christmas. The reality is that for those areas where we've identified some structural changes we need to make the categories in terms of range. That is important for us to have the right conversations with our supply partners, allocate the right time. To be able to work through that we need to work within the grocery code. Of course, as well, and we're very, very mindful of that. And so as quickly as we can, we are focused on making those improvements, but we do need to do it in the right way in a way that's sustainable for our supply partners as well. Thanks.

There are no further questions at this time, and that does conclude our conference for today. Thank you for participating. You may now disconnect.