Woolworths Holdings Limited

For the half year ending December 2025, group turnover was ZAR 42.5 billion, up over 6% in constant currency. Adjusted EBITDA was ZAR 4.6 billion, up 4.2% in constant currency, and adjusted EBIT was ZAR 2.9 billion, up 4.1%. adHEPS was ZAR 1.70 per share, up 3.8% in constant currency and 0.7% in rands, and the interim dividend was ZAR 1.18 per share. Group net borrowings were ZAR 5.8 billion, net debt-to-EBITDA was 1.48x including leases, cash conversion was 110%, and return on capital employed was 16.6%. Segment highlights included Woolworths South Africa sales up 6.8%, Food EBIT up 3.5% to ZAR 1.8 billion, FBH EBIT up 1% to ZAR 771 million, WFS underlying profit after tax up 1.5%, and CRG EBIT up 4.2% in Australian dollars but down 0.6% in rand terms. Looking ahead, management said H2 Food price movement is expected to be 3% to 4% excluding meat, FBH price movement is expected to be 3% to 3.5%, and first-8-week H2 sales were up 5.4% in Food, 12% in FBH, and 1.6% at CRG. CapEx was ZAR 1.4 billion in H1 and is forecast to be a further ZAR 1.2 billion in H2.

Roy Bagattini framed the period as evidence that the group’s “heavy lifting is behind us,” saying prior investments in systems, logistics, leadership and operating models are now translating into results. He emphasized that the company is shifting from fixing businesses to growing them, with a focus on protecting core franchises, expanding adjacent opportunities like Beauty, Home and WVentures, and using loyalty and customer experience to deepen cross-shop. His tone was confident and constructive, but he also acknowledged that lower inflation, weather, foot-and-mouth disease and a difficult Australian retail backdrop are tempering near-term growth.

Zaid Manjra highlighted that sales growth outpaced earnings because of gross margin pressure from the Midrand DC depreciation, online mix, pricing investment in FBH, inventory clearance in FBH and CRG, and FX headwinds. He cited ZAR 300 million-plus of working capital release, ZAR 4.8 billion cash from trading, free cash flow of over ZAR 2 billion, a 110% cash conversion ratio, and net borrowings of ZAR 5.8 billion with leverage at 1.48x. He also noted H1 CapEx of ZAR 1.4 billion, a planned ZAR 1.2 billion in H2, buybacks of ZAR 356 million in the half, and an average buyback price of ZAR 51.23 per share.

Analysts focused on FBH gross margin pressure from price investment in kids, and Roy defended the strategy as a deliberate trade of margin percentage for higher volume, saying the business had gained market share and that the kids price-investment basket sold 30% more volume in summer and 28% more in the winter launch. Questions also centered on Food momentum, inflation and foot-and-mouth disease; management said inflation in the first 8 weeks of H2 is broadly in line with H1, meat inflation is around 30% year over year, and the business is selling about 70 tonnes less meat per week, though supply availability has been protected through alternate sourcing. On costs and inventory, Zaid said H2 cost growth should be broadly similar to H1, while inventory is improving: CRG is 15% lower year over year and FBH is 7% down versus June 2025.