Woolworths has reported its annual profit was almost flat as product shortages caused by floods in NSW and Queensland earlier this year, and COVID-19 outbreaks led to a surge in sick workers taking days off.
The retailer's net profit from continuing operations rose 0.7 per cent to $1.51 billion — a result which fell "below our aspirations", according to its chief executive Brad Banducci.
Its sales jumped 9.2 per cent (to $60.85 billion) in the year ended June 30, and the company will pay shareholders a final dividend of 53 cents per share.
But its COVID-19 costs rose to $211 million (up from $205 million in the previous year).
Woolworths said, on average, the price of its goods increased by 3.6 per cent between April and June due to "industry-wide input cost pressures".
Although the price of meat (particularly beef) and vegetables continued to rise due to supply disruptions caused by wet weather and flooding, fruit prices fell in the June quarter.
Woolworths also said the surging cost of living was "beginning to impact all aspects of our customers' shop and we are seeing a gradual change in customer shopping behaviour".
"While still very difficult to separate from the COVID-related impacts of the last two and a half years, we are seeing some customers trade down from beef into more affordable sources of protein and trade across from fresh vegetables into more affordable frozen and canned offerings."
'Volatile and challenging' conditions
By 10:20am AEST, Woolworths' share price had dropped 3.1 per cent to $36.24, after its CEO warned of difficult times ahead.
"In summary, we expect the trading environment to remain volatile and challenging due to endemic COVID disruptions, ongoing supply chain challenges, higher costs across our business and cost-of-living pressures for our customers," Mr Banducci said in a statement.
"However, we are increasingly more agile and purposeful in responding to these challenges and are focused on improving our underlying operating performance across all aspects of our value chain after three years of disruption."
On a different measure of full-year earnings, its net profit after significant items surged 283 per cent to $7.93 billion.
However, that figure was inflated by Woolworths splitting off its liquor business Endeavour Group (which owns the BWS and Dan Murphy's brands) into a separate company.
The supermarket giant recognised a one-off gain of $6.39 billion from that restructure.
