gave Woolworths Group Ltd (ASX: WOW) shares fell 9% after the supermarket business revealed its third quarter FY26 update.
Woolworths is the largest supermarket business in Australia. It also owns Countdown supermarket businesses in New Zealand, BIG W and Petstock.
FY26 Q3 Performance
For the 13 weeks to April 5, 2026, total sales for the third quarter rose 4.5 percent to $18.1 billion, the business said. Group e-commerce sales rose 20.2 percent to $2.7 billion.
Inside it:
- Australian food sales rose 5.9% to $13.8 billion.
- Australian business-to-business (B2B) sales up 4.9% to $1.5 billion
- New Zealand food sales fell 5.2% to A$1.81 billion in AUD terms, but rose 1.4% to NZ$2.15 billion in New Zealand dollar terms.
- W Living (BIGW and Petstock) sales rose 4.8% to $1.27 billion.
Within the Australian food segment, Woolworths reported comparable transaction growth of 1.9%, comparable items per basket growth of 2.4% and comparable item growth of 4.3%. E-commerce as a percentage of sales was 16.6%, up from 14.2% in the third quarter of FY25. Excluding tobacco, Australian food sales rose 7.3%.
For that 13-week period, the average price change was negative 0.8%, or negative 0.7%, excluding tobacco and fruits and vegetables.
However, adjusting for Easter, Woolworths said its Australian food sales growth was just 3.6% and headline inflation excluding tobacco and fruit and vegetables was negative 1.2%.
Within W Living, BIG W sales rose 3.9% to $1.03 billion and petstock sales rose 15.9% to $237 million. Petstock has benefited from new store openings, franchise site repurchases and acquisitions of its own brand pet food and accessories businesses in previous periods.
Profit expectations
Woolworths noted that conflicts in the Middle East are creating more uncertainty for customers, suppliers and the team.
It has already been hit by higher fuel prices, while the secondary effects are likely to have an increasing impact on inflation over the months.
Woolworths said that by “putting customers first and maintaining a strong focus on productivity and cost discipline”, it thinks it can navigate the current environment.
It said it was trying to minimize the impact on consumers by acknowledging cost pressures from suppliers and transport partners.
In March and April, Australian food retail sales rose 5.4 per cent year-on-year (or 6.5 per cent excluding tobacco). It provides this period as it includes Easter and ANZAC Day both this year and last year.
It also noted that March benefited from the impact of pantry stocking and cycling industrial action last year.
Australian Food EBIT (EBIT defined) is still expected to grow in the mid to high single digit range, but is no longer expected to deliver at the upper end of the guidance range. This reflects higher fuel costs and price investments to manage rising inflation.
In New Zealand, market growth is slow and the market remains competitive. NZD Second half EBIT is expected to decline marginally, although total EBIT for FY26 is expected to increase.
BIG W’s sales growth remains “moderate”, although sales quality remains strong and it expects to deliver positive EBIT and cash flow for FY26.
Woolworths Share Price Outlook
The short-term dividend impact for shareholders is not ideal, which explains the current 6% decline, but it could (re)generate goodwill in the long term.
I’m not sure if this is a good time to invest in Woolworths shares considering how much inflation there is going to be and how customers will respond.
If it’s a struggle to grow dividends for the foreseeable future, there are other defensive ASX dividend shares I’d like to buy.
