Woolworths has reported a $175 million surge in net profit to $1.14 billion for the 2026 financial year, lifting its market value briefly above $50 billion. CEO Brad Banducci attributed the result to increased customer traffic and the popular Ooshies toy promotion, not to higher shelf prices. The announcement comes as Australian households continue to grapple with a severe cost-of-living crisis, reigniting debate over whether supermarket giants are profiteering during a period of economic hardship.
The supermarket giant's full-year results, released Wednesday, showed net profit after tax rose 18% from $967 million a year earlier. Revenue increased 4.5% to $101.3 billion, driven by a 3.8% lift in comparable sales across its Australian food division. Investor enthusiasm pushed Woolworths' market capitalisation past $50 billion for the first time in five years, before settling to a gain of about $2 billion on the day.
CEO Brad Banducci insisted that pricing decisions were not the primary driver of the profit growth. “Our gross profit margin actually decreased slightly when you look at the underlying numbers,” he told analysts. “What you are seeing is more customers choosing Woolworths and buying more products, particularly through our Ooshies collectables program, which brought families into stores.”
Ooshies, a reusable-plastic animal toy promotion, was relaunched in 2025 and has driven significant foot traffic and basket sizes. Banducci said the program contributed directly to sales growth without requiring price increases.
However, critics point to Woolworths’ underlying profit margin, which rose to 5.6% of sales from 5.2% last year. Consumer advocacy group Choice has called for a parliamentary inquiry into supermarket pricing, arguing that higher margins during a cost-of-living crisis suggest insufficient competition. “When families are cutting back on essentials, a supermarket that posts a $1.14 billion profit and expands its margins is not acting in the interests of consumers,” said Choice spokesperson Kate Simpson.
The Australian Competition and Consumer Commission (ACCC) is already conducting a separate investigation into pricing practices across the grocery sector, with a preliminary report due in early 2027. Political pressure has also mounted; the Greens and several independent MPs have called for stronger divestiture powers to break up what they describe as a “supermarket duopoly” with Coles.
Woolworths defended its performance by noting it has invested $400 million in price reductions during the year and increased spending on supplier partnerships and logistics. Banducci also pointed to rising wage and energy costs that have squeezed retailers across the board.
Despite the defence, the profit announcement has fuelled public anger, particularly on social media, where the hashtag #WoolworthsProfiteering trended briefly on Wednesday. The company’s shares closed 3.4% higher, reflecting investor confidence in its strategy.
Analysis
Why This Matters
- The profit announcement highlights the disconnect between corporate performance and household budgets during a prolonged cost-of-living crisis, potentially fuelling public anger and political backlash.
- It raises questions about the competitiveness of Australia's grocery sector, where Woolworths and Coles control roughly 65% of the market, limiting consumer choice.
- The ACCC inquiry and parliamentary pressure could lead to tougher regulation of supermarket pricing and market concentration, affecting future business models.
Background
Woolworths has consistently reported strong profits over the past decade, but the margin of this year's increase is unusually high. The company relaunched its Ooshies collectables program in 2025 after a four-year hiatus, reviving a promotion that had previously driven significant sales growth. The program involves giving away reusable plastic animal toys for every $30 spent, and has been criticised by environmental groups for encouraging excess consumption.
The broader economic backdrop is one of rising interest rates, high inflation, and stagnant wages. Many households have cut back on discretionary spending, but supermarket sales have remained resilient due to essential nature of groceries. This resilience has allowed major retailers to maintain or grow margins while smaller competitors struggle.
Political scrutiny of supermarket pricing intensified in 2024 following public hearings by the Senate Select Committee on Cost of Living, which heard evidence of price markups and supplier exploitation. The ACCC launched its supermarket inquiry in May 2025, with a focus on pricing transparency, loyalty schemes, and barriers to entry for new competitors.
Key Perspectives
Woolworths CEO Brad Banducci: The profit is driven by higher customer volumes and the successful Ooshies promotion, not by price increases. “We are acutely aware of the cost-of-living pressures Australians are facing, which is why we have invested $400 million in lower prices this year.” He argues that improving supply chain efficiency and negotiating better with suppliers, not raising shelf prices, allowed margin expansion.
Consumer Groups (e.g., Choice, ACCC): They question whether margin growth can be achieved without some element of price rises or supplier squeeze. Choice says the profit margin increase, even if small, is evidence of lack of competition. They call for stronger divestiture powers and mandatory price reporting.
Political Critics (Greens, independents): They argue the supermarket duopoly exploits its market power, and that the government’s voluntary Food and Grocery Code of Conduct is insufficient. They want stronger enforcement mechanisms and potential forced divestiture of stores in concentrated markets.
What to Watch
- The ACCC’s interim report on supermarket pricing, expected in early 2027, which may recommend new regulatory powers.
- Woolworths’ quarterly sales data over the next 12 months, to see if Ooshies-driven growth continues or if consumer backlash affects foot traffic.
- The government’s response to the growing political pressure—whether it introduces new legislation to strengthen competition in the grocery sector or settles for voluntary measures.