Australia’s Woolworths Announces A $1 Billion Lawsuit Against New Zealand Retailers Due To The Dire Situation


Woolworths, in its 2024 interim results announced on Monday, anticipates a non-cash impairment of NZ$1.6 billion ($974.40 million). This adjustment reflects the challenges faced by the retailer’s New Zealand business amidst a weak market outlook, causing shares to experience their most significant decline in a fortnight.

However, Woolworths highlights positive outcomes from its Australian stores and food distribution business, mitigating the subdued performances of its New Zealand grocery and Big W discount segments.

Australia’s largest grocer projects unaudited EBIT for the first half between A$1.68 billion ($1.10 billion) and A$1.70 billion, slightly surpassing the A$1.64 billion reported in the previous year. The expected rise in EBIT is attributed to the robust financial performance of its Australian food business and food distributor, PFD Food Services.

E&P Capital retail analyst Phillip Kimber noted, “Woolworths has faced ongoing challenges with its New Zealand business, exacerbated by recent adverse macro-economic conditions.” Shares of Woolworths registered a 1.2% decline at A$35.8 as of 2347 GMT, indicating a more robust performance from the key Australian Food business but expressing disappointment in the continued volatility of the NZ Supermarket business.

Additionally, Woolworths foresees a A$209 million loss following a review of its 9.1% stake in local alcohol retailer Endeavour Group. The decision stems from Woolworths perceiving that it no longer holds “significant influence” over the ASX-listed peer.

The impairment in New Zealand will lead to a write-down against the company’s current goodwill balance of NZ$2.3 billion. Woolworths attributes this to the weaker medium-term market outlook and ongoing organizational transformation initiatives that have yet to fully realize their potential. The company had acquired the wholesaling and supermarket assets of Foodland’s New Zealand business in 2005 in a deal valued at A$3.38 billion.

Woolworths expects first-half earnings before interest and tax (EBIT) of NZ$71 million for the New Zealand segment, marking a 42% decrease from the corresponding period a year ago.

- Published By Team Australia News

About the author

Team Australia News

Leave a Comment