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The cost of an industrial dispute in Victoria and NSW has blown out to $140 million in lost sales for Woolworths (ASX: WOW) with the company yet to quantify the full impact to the bottom line as work resumes following an agreement struck with workers on Saturday.
Woolworths estimates the industrial dispute that affected the operations of four distribution centres for more than two weeks could hit pre-tax earnings for its Australian Food division by up to $60 million.
The company is counting the cost after the four affected distribution centres – three in Victoria and one in NSW – resumed operations following the United Workers Union accepting a pay rise of about 11 per cent over three years.
This was down from the 25 per cent sought by the union, but not after a stoppage over 17 days disrupted the deliveries of food products to Woolworths supermarkets in Victoria, ACT and parts of NSW.
Woolworths says its Australian Food division’s sales were negatively impacted by a total of about $140 million for the 17 days up to 8 December, with about $90 million of that accrued since 3 December when it previously announced a $50 million hit to sales.
“The estimated direct one-off negative impact of this dispute to date on Australian Food EBIT is approximately $50- 60 million, reflecting the impact of lost sales, additional transport and supply chain contingency costs and elevated levels of stock loss,” says the company.
“This one-off impact was not factored into the forecast earnings range provided for Australian Food for H1 F25 in October.”
Woolworths Australian Food division had forecast EBIT of between $1.48 billion and $1.53 billion million for the six months to the end of December. This was already down from the $1.595 billion recorded in the first half of FY24.
The company says the full extent of the one-off hit to earnings currently remains unknown, adding that it is expecting further sales and earnings impacts for the division in the second quarter due to the “time and effort required to rebuild stock levels at both the distribution centres and stores ahead of the busy Christmas trading period”.
“We are pleased to have endorsed offers and a competitive wage for our team at the four distribution centres (DC) subject to industrial action over recent weeks,” says Woolworths Group CEO Amanda Bardwell.
“With just over two weeks until Christmas, we are now moving products out of the DCs and onto supermarket shelves as quickly as possible for our customers.
“We are fully focused on restoring stock levels and getting products to stores where they are needed most, with stock levels to gradually improve as we seek to provide customers with a great shopping experience this Christmas.”
Bardwell repeated an apology to customers for the disruption caused by the industrial dispute to the supermarkets affected.
“We know it has been frustrating shopping in our stores and online in recent weeks in Victoria, the ACT and parts of NSW,” she says.
“I would like to sincerely thank them for their understanding and patience.”
Woolworths says it will deliver a full update on the one-off impacts of the industrial dispute in February, when the company releases its half-year results.
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