By Stuart Condie

SYDNEY--Woolworths Group Ltd. expects first-half earnings from its Australian food business to fall by as much as 9.2% largely due to costs related to the Covid-19 pandemic.

The retailer on Tuesday said it anticipates Covid-related costs of between 210 million and 220 million Australian dollars (US$150.6 million-US$157.8 million) for July-December. Australian food earnings before interest and tax will fall to A$1.19 billion-A$1.22 billion, from A$1.31 billion a year earlier, it said.

Woolworths said inclement weather on Australia's east coast had also hit sales.

"The first half of FY 2022 has been one of the most challenging halves we have experienced in recent memory due to the far-reaching impacts of the Covid Delta strain and its impact on our end-to-end stock flow and operating rhythm," Chief Executive Brad Banducci said.

Woolworths expects direct Covid-related costs in Australian Food of about A$150 million, which equates to 0.6% of sales. It said the costs are split between supply chain issues and its eponymous supermarkets, where measures are in place to ensure customers and staff safety.

It also expects elevated operating costs of approximately A$60 million to A$70 million, including from the deferral of performance initiatives. It said supply chain costs also rose on fuel-price increases.

Yet Mr. Banducci said Woolworths had a good stock position and positive trading momentum heading into the key Christmas trading period.

Discount department store BIG W's 2Q sales momentum improved relative to 1Q following the end of Covid-related lockdowns and store closures in Australia's New South Wales and Victoria states. Sales for 2Q to date are down 3.3% on-year, compared with a 17.5% decline in 1Q.

Woolworths expects first-half Ebit for Big W of between A$20 million and A$30 million, down from A$133 million a year earlier.

It said its New Zealand Food operations were showing strong first-half sales growth.

Write to Stuart Condie at stuart.condie@wsj.com

(END) Dow Jones Newswires

12-13-21 1737ET