Supermarket wars: Customers have voted with their wallets, and Woolies lost

With the supermarket giants’ earnings now out, we have a clear winner: Coles has taken Woolworths to the cleaners – or put another way, Coles has wiped the aisle floors with Woolworths.

Put simply, Coles out-trades Woolworths, and Coles boss Leah Weckert out-manages her competitor at Woolies, Amanda Bardwell.

The respective share price reactions said it all – Coles gained 8 per cent on the release of its 2025 financial year result, Woolworths’ shares dived 13 per cent.

The trouble is that Bardwell didn’t have a cogent explanation for why Woolies’ profit was down 17 per cent when its arch-rival managed to grow its earnings.

Woolworths’ Australian supermarket business had weak sales growth and poor profit performance, but she found it difficult to convey why this was the case. She pointed to the costly industrial action earlier in the financial year, and the challenging legal action by the competition regulator that had accused both supermarkets of engaging in false discounting.

Subject to damaging attacks from politicians who accused them of price-gouging in the cost-of-living crisis, both grocery giants had no shortage of distractions and optics challenges.

Now, thanks to Wednesday’s dismal result, shareholders have developed a trust issue with Woolworths management as well.

But the crux of the problem at Woolworths appears to be a lack of trust from customers about its value proposition – and this is despite the company having invested $100 million in bringing down shelf prices on a swath of items.

And now, thanks to Wednesday’s dismal result, shareholders have developed a trust issue with Woolworths’ management as well.

Bardwell promised to address the complexity of the business with a simplification program. But that remains a work in progress. It promised that lowering shelf prices would improve the relationship with shoppers, but Coles moved swiftly to counter that move by reducing its own prices. So that trolley land grab instigated by Woolworths just produced a supermarket price war rather than improving its market share.

Indeed, sales numbers produced by other grocery businesses prove that Woolworths has lost market share against its major competitor.

The one ray of hope offered by Woolworths was that its customer satisfaction scores had improved and that this was a necessary precondition for a rise in sales and profit.

Beyond that, all Bardwell offered was a big dollop of “trust me” and “it takes time”.

A conga line of retail company analysts briefed by management after the result were clearly scratching their heads. Each of these frustrated experts asked the same question (albeit framed differently) about why sales and profits were weaker than those of its competitor.

Is expenditure too high? Are price discounts insufficiently generous?

Adding to the earnings grief, Woolworths’ general merchandise department store Big W produced a result that the company called disappointing, but that anyone else would call a disaster.

This business has been a running sore inside the Woolworths portfolio for years, but managed to earn $14 million last year. Not so in 2025, when it racked up a loss of $35 million.

Within Woolworths, Big W isn’t the main game, but it’s an unhelpful weight on group profit.

Bardwell says she has plans to fix this business, but so did her predecessors. Its main competitor, Kmart Group, earned $958 million last year.

Bardwell marked fiscal 2025 as a “transitional year” and promised that the company would return to earnings growth this year.

However, in the first eight weeks of the financial year, Woolworths supermarkets grew sales by just 2.1 per cent compared with the same period last year. Coles has experienced a much stronger start, increasing sales in the same period by 4.9 per cent.

Bardwell has an earnings mountain to climb.

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