By Mike Cherney

SYDNEY--Australian grocer Woolworths Group Ltd. said net profit from continuing operations fell in the fiscal first half as it sought to fix salary underpayments to some of its employees.

Woolworths said net profit from continuing operations in the half year ended Jan. 2 was A$676 million, a decline of 21%. Including the gain on its demerger from drinks business Endeavour Group, however, Woolworths said statutory net profit overall was more than A$7 billion. Total revenue from continuing operations rose by 8% to A$31.9 billion.

Woolworths declared an interim dividend of 39 Australian cents per share. It said that is a slight drop from the prior period, when its dividend totaled 40 Australian cents excluding Endeavour Group.

Chief Executive Brad Banducci said the fiscal first half ended strongly with positive trading momentum around the Christmas holiday. However, the result was hit by a A$119 million post-tax charge primarily related to hourly team member remediation costs.

Woolworths said Australian food sales rose 3.4%, New Zealand food sales rose 10.7% on an Australian-dollar basis and that Big W discount department store sales declined 9% in the first half.

Looking ahead, Woolworths said the impact of the Omicron variant in Australia had led to strong sales growth to start the second half, as consumers wary of the coronavirus spent more time at home. It said Australian and New Zealand food sales were up 5% in the first seven weeks of the half, though Big W sales declined by 4%.

Woolworths warned that inflationary pressures would continue to intensify and that shelf prices are up 2% to 3% in the fiscal second half so far. However, it said that it expects an improved group financial performance in the second half assuming normalization post-Covid-19 continues. It added that Big W is expected to report a profit in the second half.


Write to Mike Cherney at mike.cherney@wsj.com


(END) Dow Jones Newswires

02-22-22 1748ET