We are better together
WOOLWORTHS GROUP LIMITED
ABN 88 000 014 675
How we work together
Our business model
Our value chain
Delivering value for all of
Group financial performance
New Zealand Food
Addressing climate change
and nature together
Our pathway to net positive
Our material risks
Board of Directors
Group Executive Committee
Directors' Statutory Report
Independent Auditor's Report
Acknowledgement of Country
Woolworths Group acknowledges
the many Traditional Owners of the lands on which we operate, and pay our respects to their Elders past and present. We recognise their strengths and enduring connection to lands, waters and skies
as the Custodians of the oldest continuing cultures on the planet.
We remain committed to actively contributing
to Australia's reconciliation journey through listening and learning, empowering more diverse voices and working together for a better tomorrow.
Woolworths Group reaffirms our support for the Uluru Statement from the Heart, and its calls for a First Nations Voice to Parliament enshrined in the Constitution.
This report contains forward looking statements, including, but not limited to statements regarding: trends in consumer preferences; commodity prices; goals, targets, plans, strategies and objectives of Woolworths Group; assumed near and long-term scenarios and transition pathways; potential global responses to climate change; regulatory and policy developments; the development and uptake of certain technologies; and the potential effect of possible future events on the value of Woolworths Group.
The forward looking statements in this report are based on management's good faith, current expectations and reflect judgements, assumptions and estimates and other information available as at the date of this report. They are, by their nature, subject to significant uncertainties, many of which are outside Woolworths Group's control. Actual results, circumstances and developments may differ materially from those expressed in this report and readers are cautioned not to place undue reliance on these forward looking statements. Forward looking statements should therefore be read
in conjunction with, and are qualified by reference to the expectations, judgements, assumptions, estimates and other information and risk factors, referred to above.
Woolworths Group is purpose-led; our ambition is to create sustainable value for all of our stakeholders
As one of Australia and New Zealand's largest retailers, we recognise the far-reaching impact we have on the communities in which we serve and understand the role we play in driving positive change.
Creating better experiences together
for a better tomorrow
About this report
The 2023 Annual Report provides a consolidated summary of Woolworths Group's performance for the financial year ended 25 June 2023, as well as progress against our strategic agenda and Sustainability Plan 2025 to create long-term value for our stakeholders.
- Our Directors' Report and Operating and Financial Review are featured on pages 2 to 73 of this report and the information in these sections has been verified through the Group's internal verification process
- The Remuneration Report on pages 76 to 99 and the Financial Statements on pages 101 to 170 have been audited by Deloitte.
This report should be read in conjunction with the other reports that comprise the 2023 reporting suite, including:
Sustainability Data Pack
Modern Slavery Statement
Corporate Governance Statement
Halfway to 2025Halfway to 2025Accelerating for change
The 2023 Woolworths Group reporting suite can be accessed online at:
1 highlightsPerformance 2 reviewBusiness
served in store on
in Australia and
average per week
Our financial performance
New Zealand Food
- 5.7% from F22
Group eCom sales 4,5
eCom sales penetration 5,6
Group EBIT 7
Our sustainability highlights
1 highlightsPerformance 2 reviewBusiness
New Zealand Food
New Zealand Food
Average weekly digital
New stores and renewals2
traffic to Group platforms
<25 years of age
23 new stores
16.3% from F22
First Nations team
Rewards members 1
members in Australia
+750,000 from F22
Voice of Team score for 'sense of belonging'
Employer AWEI status
Employer of Choice Award for the second year
certification for fifth consecutive year
Reduction in scope 1 & 2 emissions 9
from 2015 baseline
Renewable electricity in SA
Solar operating or under construction
Food waste diverted from land fill
Equivalent of meals donated to food rescue
Food waste from stores diverted from landfill
80% Woolworths Supermarkets
- Total number of members that have joined the program since inception.
Includes Woolworths Supermarkets, Metro Food Stores, Countdown Supermarkets and BIG W.
3 Australian Food only.
- Continuing operations.
- F22 and F21 restated to include Woolworths at Work as part of Australian Food.
Group eCommerce penetration is calculated based on Australian Food, New Zealand Food, BIG W and MyDeal sales only.
7 Continuing operations before significant items.
8 Excluding Endeavour Group and normalised to remove the impact of the 53rd week and AASB16 if it had been in place in F19. 9 Using the market-based method for calculating electricity emissions.
The value of a better tomorrow
It is a pleasure to introduce to you Woolworths Group's 2023 Annual Report, the first since I assumed the role of Chair at last year's AGM.
Melbourne South Regional DC and Melbourne Fresh DC in Victoria; Adelaide Regional DC expansion in South Australia; Palmerston North DC and Auckland Fresh DC in New Zealand and Heathwood Chilled and Frozen DC in Queensland. A new Fresh DC in Christchurch, New Zealand, and Woolworths Group's first automated CFC in Auburn, Sydney, are on track to open in 2024.
Expansion into complementary adjacencies has played an important role in the year to reinforce our cornerstone retail businesses and support growth. Our foodservice business, PFD Food Services, had a strong year with growth of 28%. The acquisition of retail media business, Shopper Media, in September, helped deliver Cartology growth of 29%, despite the challenging advertising market. The acquisition of an equity stake in Petstock Group announced in December 2022, subject to ACCC approval, will also enable more customers to conveniently shop for all their everyday needs across our connected Group.
The value of a better tomorrow
Woolworths Group recognises that operating in a sustainable way, having a positive impact on the communities in which we operate and maintaining the highest levels of governance, will benefit all of our stakeholders.
As we move into our centenary year in 2024, the Board remains focused on supporting our CEO and management team as we execute our ambitious strategy. While our operating environment remains somewhat uncertain, we are reassured by both the performance and underlying health of the Group and energised by the opportunities ahead of us.
We will be relentless in providing value for our customers and supporting our team across the Group. We will continue to realise the benefits of our investments to date but will also continue to invest, in a disciplined fashion, to strengthen our cornerstone businesses and platforms, grow our adjacencies and evolve the Group to meet the changing needs of our customers.
We will be guided by our values and continue to do what is right for the communities
we serve. We will continue to progress our Sustainability Plan 2025 to not only have
1 highlightsPerformance 2 reviewBusiness
The review of F23 confirms that Woolworths Group is performing well across most measures. The most important driver of our performance has been Woolworths Group's team members. Throughout F23, we have seen first-hand how their efforts have supported customers and their fellow team members, despite the various challenges they again faced during the year. I want to start by acknowledging this and thanking every team member for their hard work and dedication in F23.
I am also excited by our prospects. It has been a privilege to have played a part in the successful transformation of the business to date. However, as a result of the decisions we have taken, it is clear we have very real opportunities for sustainable long-term value creation for all our stakeholders.
Woolworths Group's performance in the 2023 financial year benefitted from a return to more stable operating conditions following material disruption from COVID in prior years.
The improved profit result for the year reflected robust sales growth, the more stable operating environment, the absence of COVID costs incurred in the prior year, and the benefits from ongoing investment in the business.
Reflecting the strong result, the Board declared a fully franked final dividend of 58 cents per share which was up 9.4% on last year, bringing the total dividend to 104 cents per share, up 13% compared to F22 and in line with earnings growth for the year. This reflects both this year's performance and the long-term confidence in our prospects.
Keeping our team (including contractors) safe when they come to work is our primary objective. Tragically we lost two team members in the last 12 months and the Board
extends its sincere condolences to the families, friends and colleagues of these team members. Investigations into these events are ongoing; however, in the context of these tragic circumstances, the Board determined that there should
be a 10% point reduction in the Group STI outcome for F23.
F23 strategic progress
While the overall operating environment for the Group improved in F23 compared to previous years, global and local inflationary impacts have created a new challenge as our customers' household budgets become increasingly stretched.
Amid this backdrop, we responded by delivering even greater value across our Food and Everyday Needs businesses. This included weekly specials and Low Price programs in Food, expanding our loyalty offer, and investing in our Own Brands to provide quality products and more affordable choices. Ensuring that all of our customers 'get their Woolies worth' remains a key priority for F24.
Material investment in the Group's digital and eCommerce assets over many years has established a solid foundation that has enabled the Group to respond to changing customer preferences. This is reflected in Group eCom sales growth of approximately 35% on a 4-yr CAGR as more customers switch to convenient online delivery solutions. This has been further supported by the transformation of the Group's supply chain including the launch of 11 CFCs since 2014 to help optimise online home delivery in key areas for supermarkets.
The Group's multi-year supply chain transformation is
a key driver of productivity improvement with the upgraded facilities enabling a wider and fresher range for customers, a material increase in capacity, and improved efficiencies.
Major new facilities opened over the last five years include
Progress on our Sustainability Plan 2025 included the launch of our latest innovate Reconciliation Action Plan to drive meaningful progress towards reconciliation with Indigenous Australia. Remediation of the first identified case of modern slavery within our supply chain was completed for 230 impacted workers, and we committed to reducing our transport emissions by 60% in 2030 compared to F22 as part of the Group's transport decarbonisation strategy.
We continued to improve our TCFD-aligned climate and nature disclosures on pages 42 to 59of this report, to transition towards alignment with the new standards for F24. To provide greater transparency, as part of our F23 reporting suite, we increased coverage of performance reporting against our 2025 Plan and released our first digitised sustainability data pack on our website. There is still much to do to better understand our role within the wider value chain and the positive impact we can have for a better tomorrow.
In March of this year, Tracey Fellows and Warwick Bray joined the Woolworths Group Board as non-executive directors.
We are delighted to have Tracey and Warwick's wealth of experience, knowledge and unique perspectives available to the Board and are confident that they will complement the Board's existing skills.
Warwick has become Chair of the Audit and Finance Committee, with Tracey joining the People Committee. Both will stand for election at the 2023 Annual General Meeting.
a positive impact but also make our business stronger and more resilient for the future.
Woolworths Group is at the heart of nearly every community in Australia and New Zealand. We look to the future with
a sense of both responsibility and optimism, guided by the potential of working better together for a better tomorrow.
Scott Perkins | CHAIR
Creating value for all of our stakeholders
While the 2023 financial year marked a return to relative stability after several years of material COVID-related disruption, the rising cost-of-living pressures impacting our customers and team has now become our key challenge. To help with this, we have continued to improve our value proposition for our customers and increased support for our teams and this will be an ongoing focus in F24.
our strategic priorities
During the year, we progressed our Group Strategic Agenda and advanced our Sustainability Plan 2025 to ensure we create value for all of our stakeholders over the medium to long-term.
Living our purpose and staying true to our core values is critical to making the many decisions necessary to meet the expectations of all of our stakeholders. With Woolworths being named Most Trusted Brand by Roy Morgan and Most Valuable Brand by Brand Finance in F23, we continue to receive strong external endorsement of our various efforts.
Sustainability is a core part of living our Better Tomorrow purpose. Key progress on our 2025 Plan included our commitment to transition our home delivery fleet to be entirely electric, enabling a 60% reduction in transport emissions by 2030; the removal of reusable plastic bags nationwide, which at the end of phase out equates to approximately 350 million fewer plastic bags annually combined with the 3.2 billion single-use plastic bags that used to be in circulation; and the first retailer to be recognised with Platinum Status by the Australian Workplace Equality Index.
We have continued to invest in our Australian and New Zealand supermarkets with 22 new stores and 55 renewals completed in the year. Tailoring our stores to the needs of individual communities is also progressing well through our Value, Core and UP store segmentation strategy. To meet the continued demand for convenience, we have expanded our eCommerce
Investing for the future
Looking ahead, I am energised by the plans we have in place to evolve and grow Woolworths Group for the better. We are committed to continuing to invest for all of our stakeholders to ensure the foundations for the Group's long-term success.
The strong year we have had would not have been possible without the tremendous effort of our team. In July 2023 we increased the retail wage paid to our store teams in Australia by 5.75% and by 7% for our New Zealand store teams. In F24 we are also focused on further enhancing team benefits via Everyday Rewards Plus.
Investing to make sure our customers get their Woolies worth remains a key priority and we have launched a number of ways to help customers spend less on their shopping. We will also continue to invest in renewing our stores in Australia and New Zealand and opening stores in new communities where opportunities arise. From early 2024, Countdown will be rebranded to Woolworths Supermarkets New Zealand. This symbolises our ambition to improve experiences for our Kiwi customers by strengthening our trans-Tasman connections and our proud history in New Zealand, having opened our first store there in 1929.
1 highlightsPerformance 2 reviewBusiness
F23 Group sales increased by 5.7% with sales momentum increasing through the year due to cycling COVID impacts in early F22 and inflation. The more stable operating environment, phase out of material COVID-related costs, and ongoing investment in recent years in Group platforms led to Group EBIT growth before significant items of 15.8%. More information on the Group's financial performance can be found on pages 22 to 40.
Group Voice of Customer (VOC) NPS ended F23 at 49 which was in line with the prior year. While we did see some improvement in the second half, customer scores are being impacted by inflation, customers returning to shopping more on weekends and evenings, and product availability challenges (although as I write, these are materially reduced). Pleasingly, Customer Care remains our highest Store-controllable VOC metric across the Group at 80%. We recognise, as ever, we have more
to do in F24 to respond to our customer's evolving needs and improve customer advocacy.
Tragically, two of our team members lost their lives at work in the last 12 months. We are deeply affected by this loss, and our thoughts are with their families and friends, and colleagues affected. Investigations into these events are ongoing and we are absolutely committed to ensuring learnings are acknowledged and implemented.
Our latest Voice of Team (VOT) survey has seen team scores improve on previous results, particularly for store team members with an advocacy score of 17 compared to eight in F22. This reflects higher scores relating to psychological health, safety and wellbeing, recognition and us taking action on team feedback.
Across our Food businesses, cost increases in commodities, energy, and labour led to above-trend price increases from suppliers during the year, particularly
in packaged products and dairy. The impact of extreme weather events also affected some Fresh categories such as Fruit & Vegetables, although both availability and prices improved in H2. To support our customers to save money and get their Woolies worth, we implemented a number of value mechanics during the year, including a strong weekly promotional program, seasonal Prices Dropped programs, as well as invested in our Own Brands via Low Prices you can Rely On, and our Everyday Rewards program which continues to grow in popularity.
In BIG W, the slowdown in consumer spending has been more pronounced in H2, particularly in Q4. Customers continue to shop BIG W to get great value on their everyday needs; however, increasingly, customers are buying only what they need, which has seen a decline in items purchased compared to the prior year.
offer for customers. Group eCom sales increased by 11.1% in the second half with Same Day and On-Demand in Australian Food growing rapidly compared to last year.
In general merchandise, a strong third party marketplace offering has become a key part of the digital customer experience. To accelerate our capabilities in this area, we completed the acquisition of MyDeal in September 2022 and are well progressed in terms of how we leverage these capabilities, particularly in BIG W.
In terms of our platforms, our supply chain transformation continues to progress as planned with MSRDC now delivering a consistent 2.4 million cartons per week, and our new major facilities in Sydney progressing to plan. Our Auburn eCom fulfilment centre is on track to open in late 2024 and the initial phase of our new Sydney NDC in Moorebank is now complete with an operational launch scheduled before the end of 2024.
Our retail media business, Cartology, continued to grow strongly with sales growth of 29% (including Shopper Media) despite a more challenging advertising market environment, with the business now servicing both New Zealand and BIG W. wiq, the Group's data and analytics platform in partnership with Quantium, is building on the continued success in optimising promotional effectiveness and personalising customer experiences, and has expanded its impact by consolidating over 30 high-impact use cases into platform solutions. Finally, we continue to grow and strengthen Everyday Rewards with a 6% increase in active members and a 7% increase in members accessing Booster offers compared to the prior year.
We continue to look after our communities with an initial investment of $9 million in F24 as part of our updated goal to reduce hunger and food waste, as announced in August. We also continue to invest in our Group platforms to leverage technology and analytics to provide better and safer experiences for our customers and team, greater end-to-end operating efficiency, and strengthen our supply chain resilience.
In 2024, we celebrate our centenary.
As we reflect on the first 100 years, and look forward to the next chapter, we are united and galvanised by our shared purpose of building a better tomorrow.
In closing, I want to say thank you to all of our stakeholders for supporting Woolworths Group and for helping us create better experiences in F23 for today and for a better tomorrow.
Brad Banducci | CHIEF EXECUTIVE OFFICER
Woolworths Ltd. published this content on 22 August 2023 and is solely responsible for the information contained therein. Distributed by, unedited and unaltered, on 22 August 2023 23:30:02 UTC.