Supermarket giant Woolworths has been obliterated on the Australian sharemarket this morning after revealing a worrying cost blowout.
Shareholders were savaging supermarket giant Woolworths on Tuesday after the company slashed its earnings forecast on a $220m Covid cost blowout and softer post-lockdown sales.
The company’s ASX-listed shares took a $4.5 billion dive within 30 minutes of trade and were near their lowest in six months after it admitted to investors that the coronavirus had wreaked havoc on its supply chain.
Compounding Woolies’ woes was supermarket sales easing during the second quarter as shoppers returned to normal purchasing habits after lockdowns.
“The first half of (the 2022 financial year) has been one of the most challenging halves we have experienced in recent memory due to the far-reaching impacts of the Covid Delta strain,” chief executive Brad Banducci said.
The company also added a run of bad weather and an ongoing drop in tobacco sales to the list of reasons for its revised first-half earnings outlook.
Mr Banducci said a wet spring and start to summer had reduced outdoor entertaining occasions, echoing comments made by retailer Best and Less in terms of the impact of poor weather.
Woolies’ first-half earnings are now set to come in at between $1.19 billion and $1.22 billion for the July to December period compared to $1.31bn a year ago.
Shares in Woolworths were at one point trading more than 10 per cent down at $36.26, the lowest since May, before recovering slightly.
The company had better news for its Big W division, with sales momentum improving as stores in NSW and Victoria reopened to customers during October.
Nonetheless, four months of lockdowns and store closures means first-half earnings at Big W are still set to plunge compared to last year
A figure of between $20m to $30m is expected, well down on the $133m from the first half of the 2021 financial year.
