Woolworths Group Stock

Thank you for standing by, and welcome to the Woolworths Group FY '26 Full Year Earnings Announcement. [Operator Instructions] I would now like to hand the conference over to Amanda Bardwell, Managing Director and CEO of Woolworths Group. Please go ahead.

Good morning, everyone. Thank you for joining us today for Woolworths Group's full year results for the 2026 financial year. I'd like to start by acknowledging the traditional custodians of the land on which we meet today, Darug Country, and I'd like to pay my respects to Elders past and present.

Joining me this morning are Stephen Harrison, our Chief Financial Officer; Annette Karantoni, Managing Director of Woolworths Retail; Amitabh Mall, Managing Director of Group eComX; Sally Copland, Managing Director of Woolworths New Zealand; and Dan Hake, Managing Director of BIG W.

I will start with an overview of the group's performance in the year and share the progress we've made against our strategic priorities. Steve will then cover our financial performance before I conclude with an update on current trading and the outlook for F '27.

We made good progress on our strategy to be the first choice for customers during F '26, and this has led to solid improvement in performance. We focused on rebuilding customer trust through investment in value and the customer experience and by returning to the levels of retail excellence our customers expect of us. This has led to solid item and sales growth, particularly in H2. E-commerce remained strong with an acceleration in H2 and our complementary businesses and services made a significant contribution to growth during the period. We remain focused on restoring a low cost discipline across the group and delivered our above-store cost savings target of approximately $400 million in the year as well as solid productivity. This supported a strong reduction in CODB.

Turning to our financial performance on Slide 5. Group sales in F '26 increased by 3.6% with group EBIT growth before significant items of 12.7%. All trading segments delivered an improved performance with our cornerstone Australian Food business, the most significant contributor. The reported EBIT growth did benefit from the cycling the disruption of industrial action in the first half of F '25. Excluding this and supply chain implementation costs, group EBIT would have increased by 8.7% in F '26.

I said last year that a key priority was to restore trading momentum in Australian Food. During the year, we invested in value, fresh and convenience, and we worked hard to improve our retail execution. The actions we have taken have led to improved trading with Australian Food sales increasing by 4.6% in F '26 with growth of 5.7% in H2. Sales growth was driven primarily by item growth with an increase in customer transactions and items per basket compared to the prior year. Pleasingly, we've seen this solid momentum continue into F '27.

Turning now to Slide 7. Consistent inflation, global volatility and consecutive interest rate rises during the year have continued to put pressure on our customers, with over 40% of customers telling us that they are struggling to make ends meet. Customers remain value focused. And while customer sentiment has stabilized somewhat over the last few months, value-seeking behaviors like shopping across multiple retailers remain elevated. AI is also shaping the way customers shop with 64% of Australians saying that they have used AI assistance to shop.

Turning now to Slide 8. Our strategy to be first choice for customers gives us confidence that we can deliver long-term shareholder value. In August last year, we shared our medium-term strategic priorities, and we've made good progress on these in F '26. I'll provide some of these highlights in the next few slides. I'm confident that the progress on our strategy will provide a strong platform to achieve the group's financial aspirations and long-term success for customers, team and shareholders.

Turning to Slide 9 and value. To rebuild price trust and provide dependable value, we lowered prices for our customers with more items added to Lower Shelf Price, which has led to an improvement in value for money scores. Providing value customers can trust is even more critical in the current environment, and we're committed to doing more to help them. As our price freeze initiative has ended, earlier this week, we announced the expansion of Lower Shelf Price, now with more than 1,000 products included in the range, with new additions, including mints, chicken, eggs and cheese, recognizing the importance of these as part of the weekly shop.

Turning to Slide 10. We also provided more value to our customers through Everyday Rewards program with investment in personalized value and new and popular Everyday Rewards campaign leading to a significant increase in member engagement. A real highlight was the significant increase in customers boosting Everyday Rewards offers across the year.

Slide 11. The best fresh offer remains critical to our success, and we've delivered improvements in quality, availability and value during the year. This has helped to deliver Fresh sales growth of 7.7% in H2, and Fruit & Vegetable Voice of Customer NPS ended the year 2 points on the prior year. While pleasing, we know we need to do more to deliver the best quality and range in every Fresh category.

We also worked hard during the year to improve our own brand offer. A highlight in H2 was the transformation of our convenience meals range, which included the launch of 83 new and 60 reformulated, ready-made convenience meals, helping to better meet the growing demand for convenience and quality. We have previously spoken about the actions we're taking to improve our range and value offer in key everyday needs categories like pet and baby.

In H2, we relaunched Little One's nappy range, featuring improved fit and absorbency, and we've seen an 80% repeat purchase rate. While everyday needs sales growth rates improved in H2, growth remains below other areas of the store, and we'll continue to improve our offer in the year ahead.

On Slide 13 and the easiest ways to shop. Engagement with Woolworths digital platforms continues to strengthen with average weekly visits to the app and website increasing 22.9% on the prior year. We also saw e-commerce orders placed using our app exceed 70% for the first time in quarter 4. Seamless digital experiences are critical to today's customer, leveraging agentic AI, Olive, our much loved digital shopping assistant, has transformed into a personal shopping companion, making the weekly shop easier for customers. While it is still early days, we're already seeing customers using Olive for recipe inspiration, meal planning and product discovery. I personally have been using Olive to recommend what to cook using what's already in my fridge alongside top-up items from my Delivery Now order.

We also recently launched Smart Basket, which helps customers build their online baskets faster through predictive additions based on purchasing habits, which is seeing positive engagement and customer retention rates. E-commerce growth remained strong in F '26 and accelerated in H2, reflecting customer investments and network expansion.

On Demand continues to be the fastest-growing area driven by our ultra-convenience and Direct to Boot Now propositions. Delivery orders delivered in less than 2 hours increased to 47% of delivery sales, up 7 points on the prior year, with over 850 stores now offering On Demand services. Direct to Boot Now more than doubled sales in the year, as we've continued to increase capacity to support demand. A growing pickup mix as well as growth in higher-margin propositions helped support a significant improvement in e-com profit during the year, together with strong productivity and increased scale.

Slide 15, execution. Our retail execution has continued to improve over the year. We've delivered better availability for customers through targeted initiatives, including holding more stock weight on key promotional lines and increasing the number of store deliveries over the weekend. While we saw some volatility in quarter 3 due to surge buying driven by the Middle East conflict, pleasingly, we've seen a recovery in on-shelf availability in quarter 4 with our out-of-stock customer metric ending the year above F '25. Our Moorebank supply chain precinct in New South Wales is performing strongly. With the NDC fully operational and the RDC ramping up well with current throughput of over 2.4 million cartons per week.

Turning to Slide 16. In New Zealand, progress on our customer strategy and strong cost discipline delivered an improvement in earnings for the year. However, lower sales growth driven by a customer flight to value and disruption from the store operating model changes led to a more challenging H2. Key operational metrics have improved over the course of H2, and we are confident that the new operating model will deliver an improved team experience and customer experience once embedded. While not satisfied with our overall performance, we made good progress on our transformation during the year with investment in Everyday Rewards and value, a wider own brand range and greater convenience supporting improvements in our customer metrics and brand scores.

Turning to Slide 17 and BIG W. BIG W returned to profitability in F '26 as improvements to our range and better execution throughout the year particularly in clothing, led to a higher proportion of full-price sales and with less clearance and markdowns. Digital and e-commerce growth remained a highlight with digital visits up 13% on the prior year and total GTV sales, which includes BIG W market, increasing by 3.7%.

In New Zealand, trading conditions are expected to remain subdued. We are focused on restoring sales momentum by delivering more value, further enhancements to our range and greater convenience to customers to deliver an improved financial performance in F '27. While trading conditions for BIG W are also expected to remain challenging, our focus will be to build on progress in F '26 through an improved in-store experience, a differentiated range, targeted value investments and accelerating e-com convenience.

Turning to Slide 19 and our complementary businesses and services. Finally, our complementary businesses and services made a significant contribution to group earnings, contributing around 1/3 of the group's EBIT growth in FY '26. Some highlights that I want to share. Petstock saw comparable sales growth of 5.8% with strong income growth following a value reset and investment in its e-commerce proposition. PFD had a strong year with solid sales and EBIT growth despite foodservice channel being impacted by a reduction in out-of-home spend in H2 and quick-service restaurant sales remained resilient. Media, rewards and services grew strongly with mobile a highlight and growth in freight, warehousing and international services drove a strong performance in PC+.

Turning to Slide 20. In February, I spoke about the strong foundations we've established to unlock the next phase of AI. We believe AI will help deliver better experiences for customers, for team and will help us transform our operations and workflows. While we have a number of projects underway, this slide reflects some of the initiatives that are driving real impact.

While I've already spoken about the transformation of Olive through agentic commerce, other highlights include our new marketing assistance fleet, which has transformed the production of our weekly catalog through leveraging AI across planning, drafting and production to bring customer-focused offers to the market faster. We are also empowering our team with tools to help make better decisions and free up their time to focus on customers. An example of this is our Team Assist platform, which is already managing over 7,000 queries per week and resolving 9 in 10 before reaching our advisory team.

Finally, moving to progress against our sustainability initiatives on Slide 21. Following the conclusion of our 5-year sustainability plan, we launched our 2030 plan, which resets our ambition for the next phase of our sustainability journey. The new plan focuses on 5 material areas. And we've continued to restore soft plastic recycling across our store network with 108 locations added in H2, bringing the total to over 700 locations. We also continued our partnership with food rescue organizations, including OzHarvest and donated the equivalent of over 44 million meals in F '26 through surplus food donations.

I'll now hand over to Steve, who will cover off our financial results in more detail.

Thanks, Amanda, and good morning, everyone. I'll start on Slide 25 with the F '26 results summary for the group. Group sales for F '26 increased 3.6% to $71.5 billion with all trading segments reporting growth. Half 2 sales increased by 3.8%. Group e-commerce sales increased by 15.9%, with an acceleration in growth in the second half to 17.2%, primarily driven by strong on-demand growth in Australian Food.

Group's EBIT before significant items increased by 12.7% to $3.1 billion, with the group's EBIT margin increasing by 35 basis points to 4.3%. Half 2 group EBIT before significant items increased by 10.9%. Group NPAT attributable to equity holders of the parent entity before significant items was $1.599 billion, up 15.4% with lower interest costs resulting in NPAT growth ahead of EBIT growth for the year. The group delivered improved shareholder returns in F '26 with group ROFE of 16.4%, an increase of 2.7 points compared to the prior year. Including significant items, NPAT attributable to equity holders of the parent entity increased by 18.1% to $1.138 billion.

Turning to Slide 26 and our group trading performance. In Australian Food, total sales increased by 4.6% to $53.9 billion in F '26. Excluding the impact of cycling industrial action in half 1 last year, sales would have increased by [ 4% ]. Within Australian Food, Woolworths Food Retail sales increased by 4.5% for the year, with half 2 increasing growth to 5.7%, reflecting our targeted investment in value, our customer offering improvement in availability and overall execution. WooliesX sales increased by 17%, driven by strong e-commerce growth of 18.6% for the year and 9.6% growth from digital and media, rewards and services. Australian Food EBIT increased by 8.5% with half 2 growth of 7%, within the mid- to high single-digit guidance range we provided.

Excluding the impact of industrial action in F '25 and supply chain implementation costs, F '26 EBIT would have increased by 4.8% and by 6.1% for the second half. Gross margin declined by 2 basis points to 28.6% or excluding tobacco declined 20 basis points, reflecting price and promotional investment, [ meat ] pressures and supply chain costs, including fuel. Offsetting this were buying benefits, growth from our complementary services, including Cartology and Everyday and a modest improvement in stock loss in the year.

Our cost performance was a highlight with CODB sales as a percentage of sales declining by 22 basis points in Australian Food, with productivity initiatives and above-store cost savings more than offsetting the inflation in store wages volume growth and higher online mix. WooliesX DAP and EBIT was up 70.3% in F '26 with e-com DAP increasing by 99%, driven by strong sales growth, a shift to higher-margin convenient propositions and productivity improvements. Excluding some one-off impacts, including cycling industrial action and cold chain investments in the prior year, eComX DAP would have increased by approximately 50%.

New Zealand sales increased by 2.5% in New Zealand dollars in F '26 with EBIT increasing by 8.8%. The second half was more challenging with EBIT declining by 7.7%. A moderation in sales growth in half 2, disruption from the implementation of a new store operating model and a reduction in gross margin led to lower EBIT in half 2 despite good cost control. Gross margin was impacted by price investments as well as higher stock loss associated with the new store operating model with impacts moderating through Q4.

In Australian B2B, sales for F '26 increased by 4.2% and half 2 sales increased by 3.4%, driven by strong PFD, PC+ and export meat sales. B2B EBIT increased by 13% with growth driven by higher volumes and cost efficiencies from PC+ and resilient sales and strong cost control in PFD. Half 2 increased EBIT by 10.8% on the prior year.

Total W Living sales increased by 1.7% in F '26 and 0.6% in the second half. Full year EBIT of $116 million increased materially on the prior year loss of $31 million. BIG W's F '26 sales increased by 0.9% with EBIT of $64 million, an improvement of $97 million versus last year. EBITDA which excludes the benefit from lower depreciation due to impairments in F '25 increased by 28%, reflecting improved gross margin due to higher full price sales and strong cost control.

Petstock sales increased by 12.3%, reflecting strong e-commerce and own brand growth and the benefit from prior year acquisitions. Full year EBIT increased by 33.5% with good and solid underlying growth. The prior year also includes, in W Living, losses from MyDeal, which reduced substantially in FY '26 following the closure of MyDeal in Q1.

The Other segment recorded a loss before interest and tax of $260 million, an increase of 23.4% on the prior year, largely driven by lower gains from disposal of properties. Higher short-term incentive costs and costs associated with the transition of BIG W to a stand-alone systems platform.

Group also reported significant items after tax of $461 million for F '26, largely related to one-off costs associated with the remediation of award covered salary team members as disclosed in half 1.

Moving to Slide 27 and our key balance sheet metrics. Average inventory days declined on the prior year, reflecting the group's solid sales growth despite higher dollar inventory holdings to mitigate potential supply chain disruptions, particularly in Australian Food as well as improved inventory management in BIG W. Average payable days increased on the prior year, largely reflecting the benefit of improved sales momentum in the second half and higher stock purchases.

ROFE increased 2.7 points to 16.4%, with ROFE in all trading segments increasing on the prior year. And Australian Food ROFE of 29.2% was up 2.4 points in the year.

Moving to Slide 28 and our capital management framework. The group generated strong operating cash flows in F '26, which were invested in sustaining our assets, funding our dividend and investing in growth. And I'll provide some further color on this over the following slides.

Moving to Slide 29 and our cash flow. The group reported operating cash flow before interest and tax of $6.5 billion for F '26, an increase of 5.2%. This was driven by EBITDA growth before significant items of 6.7%. The net working capital and noncash movement was largely driven by higher employee-related accruals and noncash-based share payment expense. Tax paid declined by 9.1% due to a lower final payment of the F '25 income tax return paid in F '26, which was somewhat offset by higher tax installment payments in F '26.

Cash used in investor activities of $2 billion primarily relates to the group's CapEx spend, which I'll talk about on the next slide. Lower dividends paid in F '26 was due to the prior including $498 million related to a special dividend. And after lease principal payments and dividends, the group generated positive net cash flow for the year of $346 million. Finally, our cash realization ratio of 107% reflected an increase in working capital and noncash.

Moving to Slide 30 and CapEx. Operating CapEx for F '26 was $1.84 billion, $187 million lower than the prior year, a reduction in sustaining CapEx primarily related to lower spend on store renewals in Australia in F '26. This was due to initiatives to deliver more efficiency in our spend per store in Australian Food, importantly, without compromising our customer experience from our renewal. This was partially offset by an increase in growth CapEx, primarily reflecting an increase in new store spend, including 17 new Australian supermarkets in the year. Gross CapEx was broadly unchanged on the prior year, reflecting an increase in net property development spend. In F '27, we expect operating CapEx to be in the range of $1.9 billion to $2 billion.

Now moving to an update on our supply chain on Slide 31. Many of you had the opportunity to visit our Moorebank precinct late last year. The NDC has been operating strongly for some time now. And pleasingly, the regional distribution center has now achieved volume milestones ahead of expectation. Both sites combined are averaging over 4.5 million cartons per week, and the Moorebank RDC is consistently reaching 2.4 cartons per week, servicing over 300 stores and almost 7,000 SKUs.

The successful ramp-up of the facility led us to ceasing ambient operations at our Minchinbury RDC in April this year. Construction of our Sydney Chilled and Fresh DC remains on track with an expected launch early next calendar year for the chilled chamber of the DC. In F '27, we expect a modest reduction in commissioning, transition and dual running costs and continue to expect the benefits from these facilities to materially offset the commissioning, transition and dual running costs of our supply chain investments.

Finally, moving to dividends and funding on Slide 25 -- sorry, 32. The Board today approved a final dividend of $0.52 per share, which is an increase of 15.6% on the prior year. This brings the total ordinary dividend for the year to $0.97 per share, an increase of 15.5%, in line with the NPAT growth for the year, with the full year payout ratio of 74.1% at the higher end of our 70% to 75% payout range. After payment of the final dividend, our franking credit balance will be approximately $1.3 billion.

Turning to our balance sheet settings. Our net debt-to-EBITDA ratio was 2.5x, lower than F '25 and remaining well within our leverage threshold. And we remain committed to solid investment-grade credit ratings and have significant headroom under our current ratings of BBB from S&P and Baa2 from Moody's.

Thanks. I will now turn back to Amanda.

Thanks, Steve. Finally, now turning to current trading and outlook. Woolworths Food Retail total sales increased by 7.6% for the first 8 weeks of the financial year, with a continuation of the momentum from quarter 4 into F '27, primarily driven by item growth. Sales momentum was further strengthened during the period by the success of our Disney Ooshies collectibles campaign, which is estimated to have added approximately 1.5 to 2 points of incremental sales growth.

Customers are expected to remain value focused in the year ahead, and we are committed to limiting and impacting the rise in costs through providing low and dependable prices. Wage growth will also remain elevated, reflecting the current year's wage rate increases and progressive changes to pay for our 18- and 19-year-old retail team members. These cost pressures challenge us to be even more efficient, leveraging technology to be more productive in order to reinvest back in the business for our customers.

New Zealand Food total sales of 4.2% in the first 8 weeks has seen an improvement in momentum relative to Q4, with some benefit from the Disney Ooshies program. In BIG W, total sales in the first 8 weeks declined modestly on the prior year, reflecting ongoing cost of living pressures on households, particularly budget customers and weaker trade in the everyday business. Our focus for both businesses will be on building on the progress we've made in F '26.

In summary, we are pleased with the momentum we have achieved in F '26. While we expect the challenging economic environment to continue with household budgets remaining under pressure. Our strategy to deliver low prices and the best range and convenience gives us confidence we can be the first choice for our customers while delivering for our team and our shareholders in the year ahead.

The progress this year would not have been possible without our dedicated team, and I want to thank them for their incredible efforts during the year. And I also want to thank our customers for choosing Woolworths. I look forward to sharing further progress on our strategy at our upcoming Investor Day in November.

I'll now turn the call over to the operator for questions. [Operator Instructions]

[Operator Instructions] The first question today comes from Adrian Lemme from Citi.

Interested in the trading update, if you exclude the estimated Ooshies impact that still implies an acceleration in sales growth, are there any signs of pantry stocking in long-life food or nonfood categories that would at least partly explain the strength, please?

Yes. Thanks, Adrian, for the question. Important when we're just looking at the trading performance for the first 8 weeks. I mean, that really starts with a very consistent strong growth across the entire second half of the year. And so we've been steadily but surely building in terms of items and customers across that period. And so we did bring that momentum, particularly from quarter 4 into the early weeks of quarter 1.

And then as you say, the Ooshies program was very popular with customers, and we saw that amplification. Even since that's now completed just in the last couple of weeks, we've seen good, strong momentum continue. And so from our perspective, it's been a really strong program that's given some great surprise and delight moments to our existing customers. We certainly saw some customers add a few more items to their basket, and so there might be in some of those pantry areas in particular a little bit of extra item growth that we saw.

But we also saw new customers that came and experienced Woolworths and the better experience that we're offering. And so we're expecting to see very consistent, strong momentum continue as we look forward, very much aligned with the momentum that we had in quarter 4.

Congrats on the result.

Thank you.

The next question comes from Tom Kierath from Barrenjoey.

I just got a question on depreciation and amortization. It came in a lot lower certainly than I was expecting, I think, first, most people's expectations. And in the second half, it's actually kind of a bit lower in some of the divisions. Was there, I don't know, a change in accounting policy? Or just a bit of color around that and how we should maybe think about it into FY '27, please?

Yes, Tom, thanks for the question. If -- the way I look at it, we've been pretty stable and consistent in our capital spend for about the last 4 or 5 years. So we've been somewhere between $1.85 billion and $2 billion in the last 4 years. So it's not a surprise to us to see depreciation start to just come back a little bit in terms of growth rates.

I think it is -- a couple of things important to note. The first one is, obviously, we got the benefit in BIG W from asset impairments in the prior year, and so we did see a reduction in depreciation in BIG W. And with the currency translation of the New Zealand dollar with the devaluation of the New Zealand dollar, depreciation was broadly flat in NZD, but actually when you convert that back to Australian dollar, you do see a reduction. So we do still expect modest growth in depreciation moving forward, but hopefully, that sort of addresses the slowdown that you observed in the second half.

The next question comes from Peter Marks from Goldman Sachs.

Can I just ask on -- in Australian Food...

Sorry, Peter, I don't think we can hear. Would you mind just speaking up? We're having a little trouble hearing you.

Got me now?

Slightly. Keep asking your question. We'll see if we can [ increase ].

Sorry, guys. Have you got me now?

We've got you now, Peter. Thank you.

Sorry about that. Just on the Aussie Food CODB outlook, we can see the, I guess, the wage impact coming. But can you talk about some of the benefits that you might have coming in FY '27 that might be able to offset that? Just noticed there was some press on possibly offshoring some roles. And I think you're probably carrying some system replacement costs in FY '26 as you roll out. But are there anything else we should be thinking about there?

Yes. Thanks, Peter, for the question. And so as you know, we've been really clear about the way we want to run the business, which is starting with welcoming more customers to shop with us and really driving that volume growth across the Australian Food business and then being very disciplined in the way that we run the business from a productivity and also from a cost discipline perspective, and we were certainly pleased with the results that we were able to deliver in terms of that CODB reduction in Australian Food in F '26. And our focus will remain on delivering and really being very focused on productivity and cost discipline going forward.

And so if you look at that, we've got, as you know, a 4.75% increase in wages for our team that we're very cognizant of in terms of the ever-increasing costs. However, we've also got a very strong productivity pipeline across our stores, our supply chain. And as we've talked previously, we also are looking to our support areas to contribute in terms of productivity and cost savings in the year ahead. And so we have announced our focus on continuing to expand our global support services as part of that. But that's both about increasing our capability and access to global talent and also being more efficient as we go forward.

We continue to look at AI and the productivity that we're able to achieve through our areas like e-commerce. If you look at the e-commerce performance, I think a real highlight in terms of the improving profitability in those channels, much of that is about the application of technology to be able to just be more efficient in the way that we pick orders.

We also have Moorebank with now being fully ramped up across the NDC and RDC, delivering some real benefits into the New South Wales stores, in particular with pallets that arrive already sorted by aisle, really saving our team a lot of time in stores as well. So certainly, we've got a strong focus going forward on increasingly being more productive, being very cost disciplined because we know that, that enables us to invest in those prices and value that our customer expects and enables us to continue to improve those experiences as well.

The next question comes from Michael Simotas from Jefferies.

My question is on WooliesX and in particular, the part that sits outside of the e-com business. You called out strength in media, rewards and services and in particular, mobile. It looks like there's about $100 million tailwind to the food business in FY '26, but the contribution was smaller in the second half. Is that sort of normal seasonality? Or was the step-up we saw in '26 effectively done, and it won't repeat and continue to be a tailwind into '27?

Yes. Thanks, Michael, for the question. When we look at the WooliesX segment that you're referring to there, we've got our Everyday Rewards, our services businesses as well, which performed very well alongside Cartology. What you're seeing reflected in the second half is also the benefit of some of those cost savings starting to flow through from the simplification and cost reductions that we looked at across our corporate areas last year. And so certainly, as we talked last year, that applied right across all aspects of our corporate office, including the WooliesX area. And so certainly, that's now in our base going forward.

Yes. That makes sense. I'm just a little bit surprised that the contribution was smaller in the second half than the first half. I thought it might have been the other way around.

Yes. I think you just need to take into account that there will also be some different seasonality that applies to some of those businesses as well. So in particular, if you think about Cartology, there's a different profile depending on what programs we might be running across the food business, for example, and the participation of suppliers in those.

And Cartology certainly has a half 1 skew of phasing, but some of our teams will have started on their cost saving initiatives in the fourth quarter of last fiscal. And so there will be just a difference in timing, particularly some of those WooliesX business, I think, started in Q4, so you won't necessarily get the full run rate in that last quarter, Michael.

The next question comes from Shaun Cousins from UBS.

Maybe just a question on Australian Food and Customer Offer Reset program. This has been quite topical, and it seems to be an opportunity for Woolworths to expand its gross margins. How should we think about this as a COGS or a lower COGS tailwind? And maybe what's the early evidence as you started to rationalize range, what that's sort of done for sales in those categories? Conscious there's a lot of noise with Ooshies and other broader momentum you've got there. But really curious around what this does for your gross margins. It seems quite significant an opportunity for you.

Yes. Thanks, Shaun, for the question. I'll give an overview, and then I'll hand to Annette to add some color to this. So Customer Offer Reset for us, as you know, is really about stepping back and looking at each individual category. And ensuring that we have got the offer right for our customers as a starting point. And so our focus is on making sure it's the right range, that we've got the right shelf capacity to be able to hold the range given customer demand. And it's also about recognizing that we need to look for every opportunity to create more value, and those low and dependable prices that we know are important in building customer trust.

When it comes to our product margin, that -- if you look at the results of the Australian Food for the year that's just completed, there's actually a slight reduction in product margin in the year. And so our focus, first and foremost, is actually on volume when we look at this program. That's what we're driving together. That's the conversation we have with our supply partners, is how do we drive volume growth together as we move forward to the benefit of, firstly, our customers, our suppliers and of course, Woolworths business as well.

I'll hand to Annette just to add a little bit of color in terms of what we're seeing. Mindful, Shaun, that whilst we've shared and been very open about the work that we're doing in this space as part of our range reviews, it's actually only in the last 6 or so weeks that some of the first ranges that were reviewed have rolled out to stores. And so it is very, very early days in terms of results. But with that challenge, I'll hand to Annette.

Yes, thank you. Absolutely right, Amanda. The very first principle of going into a range review is to make sure that we have the absolute best possible offer for our customers. And so it really is about identifying opportunities where we might see the range needing to change and then a portion in the right space, of course, having the right value and price offers for customers.

And we've talked about quite a lot over the last 12 months, making sure the products are available when our customers are in our stores or our team are shopping for online. And so with those principles in mind, we're really fully committed to supporting growth and partnering with those suppliers that also believe in that strategic alignment on making sure we have affordable and dependable prices for our customers. And so that's really key.

To tend to your specific question around how they're going, Amanda's quite right. It's very early days in terms of what's actually landing in stores. But to give you a sense, we have had one of our bigger ranges in our pasta range reviewed. We saw an optimization of range. So we did see in that example, a reduction of a range by about 5%, so not terribly material but quite a significant improvement in availability of 13%. And so we're learning as we go and as I said, working very strategically with those partners that are really supporting that view around making sure we've got great value and the right range for our customers.

Great. Sorry. And should this be a COGS tailwind for '27?

Sorry?

I'm sorry. Should you get conscious around -- you mentioned that -- going back to margin. You said that product margins actually came back a wee bit in '26. Should we see Customer Offer Reset give you a gross margin benefit in fiscal '27?

Shaun, we're not going to give a forecast on the margin going forward. But just to outline how we're thinking about it more broadly, and that is that we're very committed, as you know, to continuing to find ways to buffer customers in terms of price and continuing to make the right investments in price going forward whilst also looking at the right ways in which we can continue to improve our margin.

So that's with better stock loss management, growth in our Cartology and our rewards and our services businesses, in particular. That's our primary focus. Really want to be focused on making sure that we get that overall offer right and then look for ways in which, yes, we can expand our margin in other ways.

The next question comes from Benjamin Gilbert from Jarden.

And I'm just interested in the strong results you've had through July and August in the back of Ooshies, just how you've sort of come up that 1.5% to 2% potential estimated benefit but more importantly, where that incremental growth came from. Was it largely new customers? Was it where you were losing items to Chemist Warehouse, et cetera, in the past?

And I suppose how you're thinking around actually trying to hold on to those customers moving forward. So it feels like it's a unique opportunity. You can really lean in on things like below the line, et cetera, to try and retain those. What are you doing to sort of try to lean into retention to really capitalize on this successful campaign?

Yes. Thanks, Ben, for the question. I'll hand to Steve to talk around how we calculated the number. But just to talk to the collectible campaign itself, it did a number of things for us. Firstly, we already had a really strong underlying sales and item momentum coming out of the second half in quarter 4 and then into the early weeks of July. And then since the collectible program has finished, that's continued on similarly to the quarter 4 trajectory that we were seeing. So we're very pleased with that overall.

When we look at then the collectibles campaign and customer behavior, we certainly saw a number of things. We see a portion of customers who are already shopping with us and might add a few more items to their baskets so that they qualify for the Ooshie. We also then see some customers, who might not have shopped with us for a while, come and try us again. And as you say, that's a big opportunity for us as we go forward. And then you just see some customers who shop more frequently overall. And so it is a mix of those 3 shifts in behavior that we saw.

What we're focused on and what we're focused on during the campaign is how do we create the best possible customer experience overall. Great opportunity for us to introduce those customers who might not have seen the improved value that we have on offer, the uplifted experience that we're able to offer across both our stores and e-commerce. And then as we've come out of this phase now, yes, we've been very focused on how do we continue to retain those customers.

So Everyday Rewards plays a really important part of that. We saw really great momentum across the year for Everyday Rewards, strong boosting engagement, up substantially on the year prior, about a 10% increase. And so we know that our loyalty customers are really valuing the Everyday Rewards program, and so it creates a great opportunity for us to be able to direct target them now with additional offers and reasons to shop with Woolies.

But we also saw e-commerce very strongly during this period as well and so again, another great opportunity for us, for those connected customers shopping across e-commerce and into our stores to equally be providing more reasons for them to shop at Woolies. But really, from our perspective, the underlying focus here was to make sure that the experience was a good one so that customers would choose us first. And then, of course, we'll continue to use some of those vehicles that we have, loyalty, e-commerce, our promotions to encourage customers to come back.

And so I'll hand to Steve just to answer that specific question.

Yes, Ben. I mean, we've provided a range because it is an estimate. But the way we've tried to calculate it is we have a reasonably stable week-on-week sales at this time of year, and so we look at what was the sales growth week-on-week through the promotional period. We also, when we're investing in a customer offer like this, make sure we evaluate the -- both the current and past promotions. So we know the estimated uplift we got from the Disney discs that we ran in the first 8 weeks last year, and we've compared the uplift we've got from Ooshies and really tried to disclose what we think the incremental sales is based on that evaluation of the program and the sales uplift relative to our run rate pre and post the program. But it is an estimate.

The next question comes from Michael Toner from RBC.

Just on the operating CapEx step-up next year, and you've been consistent around that $1.8 billion to $2 billion operating CapEx mark. When is the point at which we can -- you think we can expect lower capital intensity from Woolworths? Is it sort of after FY '28 once those major CFC and Sydney Chilled projects are completed? Or do you think that circa 3.5% growth CapEx to sales is a good benchmark to assume over the medium term?

Yes, we've -- as I said earlier, in dealing with the depreciation question, our capital sort of been between this $1.85 billion and $2 billion consistently for the last 4 or 5 years. We think that, that is the right level of capital from an operating perspective to allow us to reinvest back into the business to sustain the asset base, replace either equipment or technology as well as invest in growth. And you did see a slight mix shift in terms of sustaining come down and growth go up in the year just gone.

We've also been focusing on how do we drive as much efficiency as we possibly can out of that capital program. And so in the same way, we want to make every dollar count in our OpEx discipline. The same applies in our CapEx. And so we've really been very focused on how do we make our renewal spend much more efficient without compromising the quality of the customer offer and so I think, really positive results in that regard in the current year.

We do -- we are still in the midst of our supply chain capital investment program now. And so we would expect ongoing supply chain spend certainly in F '27 and continuing to step down a little bit in F '28 as we still have our Sydney Chilled and Fresh DC that we're building at the moment, and we've got our Melbourne North automated e-commerce facility that is also due to come online in F '28.

And so we do think that envelope is about right. Sometimes, programs are lumpy, just depending on the timing of when they come in. But we think that, actually, if you look at it, capital has been coming down as a percentage of revenue over the last 4 or 5 years. But we do see good opportunities to reinvest back into the growth of our business that can drive both the top line and the bottom line moving forward.

The next question comes from Bryan Raymond from JPMorgan.

Just on the margin outlook for the Australian supermarkets business. You guys are talking in your financial aspirations section of the presentation there to have EBIT growth ahead of sales, which obviously implies margin expansion going forward. You're currently 22 bps below Coles in FY '26. That's obviously not the traditional gap that we observe in the sector given your scale and procurement advantages.

So I just wanted to understand sort of some of the levers that you see in '27 and '28, without asking for guidance on margin, of course but in terms of restoring that margin leadership, which most of us sort of expect that to occur. And if it's not customer for reset, in response to Shaun's question, you sort of downplayed the gross margin benefit there, what is the opportunity then to drive better gross margins on a sort of 1- to 2-year view -- or better EBIT margin, I should say, on a 1- to 2-year view.

So Bryan, just to clarify, our midterm aspirations continue to be to deliver mid- to upper single-digit earnings growth as we move forward. And so as you referenced that slide, I think it's important to put that in context over the long term. When you look at the question in terms of CODB, important just to be clear on the distinction of supply chain. I think, Steve, did you want to just cover that?

Yes. I think if you do the comparison between our margin and competitors, we've disclosed we had $113 million of supply chain commissioning transition and dual running costs in those numbers. Now we expect to -- some of those costs to still be in the P&L in '27 and '28, but they will come down and we'll start to see benefits in '27. They won't fully offset those commissioning costs, but there'll be a material improvement. And then we should move to a net benefit position in F '28, just in terms of how we think about the -- those one-off or discrete project-related costs impact on -- and their impact on earnings.

But I think more broadly, ultimately, we're trying to drive a sales-driven growth agenda, right? So we want to invest in our customer proposition and value to drive sales. By doing that and having a very strong and disciplined focus on cost and productivity, we would expect sales to grow faster than cost and full margins to -- or for earnings to therefore grow ahead of sales, which, as you point out, will lead to, assuming we deliver that, which is our plan, margins to gradually expand.

And just to build on that, I'd say drawing attention to Everyday Rewards, our services business, Cartology, they provide great opportunities for us going forward there, significant contributors to the margin of the food business overall, and we see strong potential for those businesses going forward to contribute to that. Continuing to manage stock loss well is a significant focus and of course, over the medium term, our supply chain investments continuing to deliver improved productivity and margin efforts there as well.

And then if you look at the overall shape of the business, yes, we're very focused on being productive across stores, across our supply chain and across our support offices. But we're also really pleased to see the performance out of our e-commerce business. If you look at the improving profitability that's coming now from that scale benefit that we have, a lot of the work that's gone in around picking efficiently across our stores, in particular, and then a quite attractive margin mix in terms of the most popular shopping experiences, whether that's Direct to Boot or On Demand, actually also being very strong from a margin contribution perspective. So we do see a lot of opportunity to continue to be able to, in the right way, improve our margin opportunities. But it all does start with us really driving a sales and volume agenda first.

The next question comes from Craig Woolford from MST Marquee.

I wanted to follow up on that e-commerce comment. If I do the maths, I think the, let's call it, the e-commerce DAP, if that's the right way to do it, looks to be about a 4.1% EBIT margin, so certainly closing in on the broader Australian Food average. So do you expect there to be a further narrowing of that margin differential between e-commerce and the broader food segment. And if you can weave in to your answer, I'm interested in how the different mix of businesses is affecting that such as On Demand taking a greater share of the sales.

Yes. Thanks, Craig, for the question. Important just to start with, as you know, we think about stores and e-commerce in a connected customer way and with a connected network. And so it's really important as we're looking at the overall performance of the food business that we start with that holistic EBIT number at the total level for Australian Food. DAP is a directly attributable profit figure and represents both all of the direct costs associated with e-commerce and the variable costs associated. It's not directly comparable to EBIT.

However, it is fantastic to see the improving DAP performance across the year, a very strong performance overall. And it certainly is something that, as we look forward, we believe we can continue to improve that margin. I'm just looking at Amitabh as I say that. Do you want to pick up the question from there, Amitabh, just around mix opportunities to continue to improve that e-commerce profitability?

Sure. Happy to do that, Amanda. It's very pleasing to have doubled the e-commerce profit from last year to this year. And then as Steve pointed out earlier, some of it is based on the -- some of the challenges we had in the previous year, but we still believe that some of the underlying drivers, and you've spoken to all 3 of the, Amanda, around scale, where we are starting to see fractionalization of cost as we grow the business to better flow-through from profit.

The mix, and I'll come back to that, with a mix both of collections and On Demand as well as productivity in how we drive discipline and efficiency in our business, all 3 drivers are actually quite sustainable in improving -- continuing to improve profitability of the e-commerce business. The one specific one to call out, as you pointed out, Amanda, is the growth of On Demand, where we are now running about 47% of all our deliveries are delivered within 2 hours.

And it's important to point out the within 2 hours part of it because, a few years ago, we used to talk quite a bit about our same-day mix of the business. But frankly, customers have moved on. They want it quicker. They want it now. And over the years, the investments we made in our store network and our direct good base allows us to continue to drive On Demand at a pace, which is quite appreciated in the market, and we hope will continue to improve and drive our profitability.

The next question comes from Phil Kimber from E&P Capital.

I just had a question on the store network. You guys have done a great job in regaining momentum and building that momentum. But the store renewals, I think was 66 in the year, if I'm reading it right at the back of the release. That seems quite low for a 1,000 store plus chain. Is that sort of the next evolution that's coming that there will be a greater ramp-up of the renewals in the Australian Food business?

Thanks, Phil, for the question. It's around 67 or so renewals across the year, which is broadly in line with what we've been doing over the last couple of years. As you know, we've had a very strong program of consistently renewing our network for the last decade and it's critical that we continue to do so. And it's in our intention to continue that going forward along similar levels.

That actually has created for us great growth. As we renew each and every one of those stores, we take the opportunity not just to improve the experience, of course, for our in-store customers and make the role of our store teams easier. But we've also been reshaping our stores so that they can better service e-commerce. And so whether that's adding the Direct to Boots, which we have well over 700 now, whether that's reconfiguring some of our back-of-house space so that we can more efficiently fulfill e-commerce, all of that has been happening for many, many years now, which is why we think we're well set up, is that focus we've had on speed to customer for e-commerce to be able to service now the demand that Amitabh has just talked to.

I'll hand to Steve if there's any other comments you might want to make on store network.

Yes, I think a couple of comments. In that renewal number we disclosed in the appendix, it's full store renewals. So we will also run an e-com renewal program. We were adding Direct to Boot and improving the capacity and space for e-commerce, which we don't specifically classify in those numbers. So it's -- we're not only touching those stores. We're touching actually a larger portion of them to really drive the growth component.

I think moving forward, really, our sort of goal is in the 65 to 80 a year. It depends on the timing of approvals, capacity of the team. And so it is a range and not necessarily definitive number every year. We look at it in terms of our capital prioritization each year.

And I think probably, the other thing to comment on is just new store growth. We opened 17 new supermarkets in Australia in the year just gone over the next 4 to 5 years. We'd actually anticipate, on average, opening between 20 and 25 a year. We -- the pipeline in the last 5 years has probably been just around, I think, 88 or 90 over the last 5 years. It's been a bit slower coming out of COVID and with both interest rates and construction costs, the developer market has been a little bit slower than we would have liked. We're really starting to lean in and leverage our capability of Fabcot to open more centers. And so you would have seen a step-up in our property development capital in the last year, in our CapEx. That's really about ensuring we've got a really strong new store pipeline for the next 5 and 10 years.

The next question comes from Caleb Wheatley from Macquarie.

Can I get your thoughts on how you're thinking about current value perception in Australian Food? Just combining a few of the comments around the COR that you've already made in prior questions. It sounds like value is still a very, very big focus. And also noting the news this week around 100 or so SKUs being added to the Lower Shelf Price program? How much further do you think you have to go in terms of sort of building that customer price trust? And then any other meaningful opportunities kind of outside of value that you're really thinking about to drive underlying sales and repeat visitations, please?

Yes. Thanks, Caleb, for the question. So we're pleased with the progress that we've made across the year in terms of value perceptions. And we measure that in a number of different ways, of course, looking at our Voice of Customer scores at an advocacy level or our value for money score in particular, has improved by 3 points across the year. And I think important to put that improvement in the context of the pressure that customers are experiencing as well. So we're pleased that the investments that we've been making in Lower Shelf Price and providing great promotions and great value from our loyalty program has contributed to an improved value perception.

It's going to be important going forward because whilst customers continue to be under extreme pressure when it comes to their household budgets, we know that what we continue to hear from them is they're looking for more value. And they've become savvier over the last 3 years in finding value. And so we're focused on listening to the feedback they've provided, which is low and dependable prices, great specials on the things and the favorites that I love and loyalty that rewards my shopping is what we're focused on providing.

I'll pass to Annette to just provide a little bit more color on some of the things that we have been doing in terms of driving that value perception. We still continue to be focused on improving it. So we've made progress, but we've still got more ways to go and in particular, when we think about the number of choices customers have as to where they shop.

Thanks, Amanda. I think absolutely. I'll start with Lower Shelf Prices. Yes, we've added those 100 extra products now over 1,000 products on Lower Shelf Prices. And given that's now well over 12 months into running, Lower Shelf Prices to still see those products in double-digit unit growth is very, very pleasing and is a signal from our customers that they really do value that everyday low and dependable prices. So it's continuing to be a great focus.

We're also seeing other trends. We have talked before about customers seeking value through whether that's using the Everyday Rewards, the app, shopping lists. They're really managing their budgets in very different ways.

Bulk products is another example of that we've seen in some categories like toilet paper and laundry liquids where we've worked really well with supply partners to make sure we're bringing those great products and prices to customers. We're seeing the larger pack sizes really deliver strong unit growth. So in categories like those where the smaller pack sizes might be in high single-digit growth, the larger pack sizes are certainly in double-digit growth. And so we are seeing customers just shop very differently in many ways. And own brand, of course, continues to be a really strong growth for us at 5.5%, so I think some really good signals from customers that the things that we're focusing on, they really value.

The next question comes from Ollie Ridge from Citi.

Apologies, this is a mistake. I didn't press the button.

We'll move on to the next question. It's from Richard Barwick from CLSA.

I had a quick question on New Zealand. If the first half looked to be sort of 2 steps forward, but the second half is definitely 1 step back with earnings actually going backwards again, so I know that you referenced subdued trading conditions in your outlook commentary, Amanda, But is it -- how should we be thinking about New Zealand? Is it realistic to expect that it can actually deliver earnings growth again for the full year '27?

Yes. Thanks, Richard, for the question. So in the second half, there's really 2 drivers of that softening performance. Certainly, the customer is continuing to be under extreme pressure in New Zealand, actually, even more than the Australian customer. Kiwis are doing it a lot tougher, particularly in the North Island and Auckland, in particular, and we certainly saw that flow through. It's a hypercompetitive market, as you know.

And then we had our new operating model in stores roll out in the early part of H2. And we did have some challenges that caused a disruption that meant we had availability challenges and some customer experience challenges as well. Pleasingly, that performance has improved both in terms of the underlying operating metrics of the business but also in our customer scores.

But as we look forward, we're just very cautious about where the customer is at the level of competition that exists there. And so whilst, of course, we're focused on improving the performance in the earnings out of the New Zealand business, our first and foremost focus is on sales momentum. I might just hand to Sally just to talk a little around what we're doing on the sales momentum front. That's critically important for us for the period ahead.

Yes. Thank you, Amanda. And I think just would also reiterate what you said earlier at the beginning. I think we -- it was a very tough half for us as a team and implementing that operating model change and really driving strong recovery across all of those customer availability scores, e-com experience. And actually, we are confident, I think, in delivering an improved customer and team experience on the go forward.

I think you've spoken to the flight to value for our New Zealand customers still 75% cross-shopping up to 5 banners a month. So a lot of effort going into the customers. And so we really need to be focused on making sure we are providing them great value and range. And so we've sharpened our execution on our customer plan, being invested in value. So some of that has been in our Member Price.

So we delivered over 1,500 Member Prices. We've had stronger trade activation across half price weeks. We have held back actually from passing on some cost price increases in key categories like meat for our customers and then really driving more value. So some of the things that launched, the bulk meat value range, market by produce, bulk potatoes, onions, fruit, really the things that Kiwi customers are looking for and they're shopping right now and being focused on that value. And I think -- in the same vein, we really want to continue providing market-leading convenience that has been something that we have had leadership and in the market for a long time and then investing in a more rewarding everyday program. So again, more value to our members who are now shopping in our stores.

Can I just clarify a couple of points there? So obviously, very focused on value, delivering that message loud and clear and so therefore, trying to deliver that value and drive sales momentum. But Amanda, if you talked about that operating model implementation, those issues, are they behind you now. So if that was a drag on the GP is at least that element sort of in the rearview mirror yet?

We're very pleased actually with the performance we've now seen out of the operating model in terms of its contribution. So we're now looking at the contribution from those changes flowing through in the way in which we expected. What we did calling out here is, yes, a strong cautiousness around the market in New Zealand. We absolutely want to deliver and need to deliver improved earnings performance. We're very clear on that. To do that effectively and sustainably over the long term, we do need to get that sales momentum driving forward. And so that's why we talked more to value. So there's more to do in New Zealand, certainly, and that's our focus.

The next question is a follow-up from Adrian Lemme from Citi.

Thanks for a quick follow-up. Questions for Steve, and this may be premature, but I noticed you've had a pretty material reduction in gearing, 2.5x, and you've noted a pretty substantial franking credit balance. Do you see that you have excess capital at these levels of gearing? And if not, where do you need gearing to get to, please?

Yes. Thanks for the question, Adrian. Look, I think I would say we're very happy with actually the cash generation in the year just on the $350 million of positive cash generation, and that has seen our leverage get down to 2.5x, which is sort of towards the lower end of our thresholds. And actually, we're also pleased to see that 15.5% increase in the dividend in line with the NPAT growth.

Just the one thing we're conscious of is not in the leverage metric, but we do sit on a relatively material provision for salaried team member remediation. And so at a point in time, once the legal proceedings are settled, that will need to be cash settled and paid. But we are always looking at our balance sheet settings to say we'll -- if we have surplus capital, what is the best way to deploy it? Is it to reinvest it back in the business to drive growth? Or is it to return it to shareholders? And that's something that we'll continue to evaluate.

The next question is a follow-up from Peter Marks from Goldman Sachs.

It's actually a related one for Steve. Just net interest was a bit better in the second half at least versus what I was expecting. It looked like lease interest declined in FY '26. How should we think about like the net interest outlook into '27? And can you just talk to -- talk through some of the drivers there in the second half?

Yes. So you've seen just that lease liability just gradually tick down as we've been focused on really shorting the whale. And so if you look in the financial statements, you'll see reduction of lease terms as we're looking for shorter leases but actually still with plenty of tenure in the option period, so we've got security of the store footprint.

So that's driving some of the lease interest reductions. We finished the year with slightly lower net debt, but actually across the year, you've seen interest increase -- interest rates increase modestly. And so we tend to have a hedged book of both fixed and variable interest-bearing debt.

I think a couple of things just depends on where the interest outlook -- the interest rate outlook goes as to what impact it has. You may have noticed in our disclosures, we have booked a $20 million interest cost in the second half associated with the interest that accrues on that payroll remediation, and so that will continue to be at around that level until that is resolved.

And I think just the other element is we have had a -- with the construction of the Moorebank DC over a number of years, there has been relatively high leasing -- sorry, interest capitalization into those projects, which we would expect to step down. So there's probably signals of an increase in -- a modest increase in interest in F '27 but one that we're just working through.

The next question is a follow-up from Michael Toner from RBC.

Just on inflation and like noting the July numbers. Half an hour ago, it looks like red meat and milk are up again sequentially versus June, which I guess is what you'd expect. But I'm curious as to what you're seeing with customer price increase requests coming through to August. And do you think you have a sense on like when this ends or won't keep getting worse month to month at least?

Yes. Thanks, Michael, for the question. I'll kick off, and then I'll hand to Annette for additional color, particularly on meat. So when we were talking with you in quarter 3, as you know, we're in the midst of the Middle East conflict having just kicked off. And at that time, we were hearing from our supply partners certainly that we would be seeing a substantial uptick in the number of price request increases, but also the quantum what's actually played out as we've reached into May and June, we have reverted back actually to the level of price increase requests that we've, on average, been receiving across the 12 months.

And so whilst there was that peak moment, it hasn't sustained. And so we're really seeing both at a quantum and actually at a dollar ask level very similar levels of price increase requests across that 12-month period, and that's continued on average through into the start of this financial year. But then within that, as always, there is some balance in red meat and lamb pricing continues to be a challenge, Annette, alongside dairy as well. So you might want to add some detail there.

Yes, certainly. Those peak requests in that Q3 really did come off and moderate fairly soon after that. We spoke about this last time. And as you said, Amanda, category and commodity-specific is what we're now seeing. And so I mean, meat's been in some levels of inflation for quite some time, certainly the whole way through F '26 just broadly.

And then within red meat, both beef and lamb. We have seen a little bit of relief on minced and trim prices just with what's happening in the global market and the export market, but broadly, the net impact is still an increase and as you say, in chiller and that's partly driven by input costs but also driven by demand of customers in high protein categories as we talk about often in cottage cheese, yogurts. And in that red meat category, we have still seen that inflated. But as I said, a lot of the moment is driven by input costs, so it's electricity, packaging and fuel. It's not driven as much as we had anticipated by the impact of the war in Iran.

The next question is a follow-up from Craig Woolford from MST Marquee.

Just a quick follow-up on inventory. Maybe it's Stephen. Just the inventory outlook, I'm interested in structurally whether the Customer Offer Reset program will have any benefits to inventory levels and how you see the working capital and inventory outlook given what was concerns around Middle East and seems less concerns now?

Yes. Thanks, Craig. In both Australian Food and New Zealand Food in really late Q3, early Q4, we made some conscious choices to hold more inventory. And that was in light of the potential risk associated with supply chain disruptions, particularly on some things that we're importing from that side of the world.

The other thing we have consciously done is hold more inventory of our faster-turning lines, really, that availability focus that we would have talked to you about probably in Q2, we're focused on saying, actually, do we need to hold more lines of those promotional lines, so the AB lines for ones that are driving a lot of sales. And so we've held more inventory in that space consciously.

Now both of these things, depending on the supply mix, don't necessarily need to be unfavorable from a working capital perspective. If you look at our averages, we're about 30 days average on inventory versus over 40 on payable days. And so we'll always look at this from a -- what's the right thing to do for supply certainty and driving sales and also managing the working capital situation.

But we feel like -- there are always opportunities, and we're always looking closely at inventory management. But we feel comfortable with the working capital position. I think probably the other thing, be remiss not to say the inventory management in BIG W is a real improvement in F '26. And so the team focused on stock flow and clearance, we ended the year actually with much healthier inventory in F '26 than the prior year.

And will Customer Offer Reset have any impact?

Not that I'm aware of. Nothing material.

The next question is a follow-up from Bryan Raymond from JPMorgan.

Mine's on tobacco. It's obviously back into growth for you guys as it was both your trading update was in line, including and excluding tobacco. So just wanting to -- and there's a lot of press around the material cut to the excise from some. Keen to understand how you see the outlook in tobacco and what -- how that might have played out from a -- I know it's a small part of sales currently, but if we do get a meaningful cut in the excise, that could have quite a significant impact essentially. So any thoughts around that would be helpful.

Yes. Thanks, Bryan. So as you say, across the year, we saw a moderating reduction, if you will. It's still had a very big impact on our earnings performance overall. And so I'd be remiss not to call that out. But certainly, as we cycled across the year and came into the second quarter, the reduction, if you will, in sales moderated. And as we've come into now the new financial year period, you would call it broadly flat, fairly consistent dollars each and every week that we're seeing.

As we look at it though, it's actually also really important to have a look at the state-based performance because it's not consistent. So if you look at Queensland, for example, where there's a stronger enforcement focus, actually, we do see a slightly higher level of sales flowing through year-on-year there compared to other parts of the country.

But again, as we've seen all the way through the last couple of years, it's actually quite volatile and very different by state and by city. And so it's a really hard one to call. At the moment, certainly, we're looking at it with a relatively flat outlook in terms of sales at the moment. But again, impact size changes, could that have an impact? Is there more enforcement that's put in place in other parts of the country? Certainly, if that were the case, you would see no doubt some uptick as we have in Queensland. But again, it's very hard to predict. We wouldn't call it.

Okay. So you're not planning for that at this stage for any major growth in the...

No, we're not planning for that, Bryan.

The next question is a follow-up from Benjamin Gilbert from Jarden.

So just to clarify the depreciation. So you said you're expecting low single-digit growth for next year because it implies it's probably going to be $150 million below where consensus is sitting. It's a decent amount lower. Is that what you're saying?

I didn't give guidance. I was not seeking to give guidance there, Ben. I was just trying to answer the question about what had happened. And so if you look, for example, at the second -- the best way to look at it is actually the disclosure we give at a business unit level. So for example, in Australian Food, we had 3.7% depreciation growth. And I think in the second half, it was around 4%. So there are certainly some one-off benefits associated with both currency and the cycling of the impairment benefit in BIG W, but I would expect it to continue to grow year-on-year.

Okay. So it will grow. And obviously, we look at that second half trend for food. And then New Zealand, depending on assumptions around currency, there will be some increase, but obviously making assumption on FX and BIG W obviously cycling some of the impairment, hence why that's a bit lower.

Yes, that was the key. It was like worth $40 million roughly benefit year-on-year in BIG W. And so that -- if you're looking at a group level, I think we did try to call this out a year ago, but I'm not sure if I picked it up in consensus.

At this time, we're showing no further questions. I'll hand the conference back to Amanda for closing remarks.

Thank you for joining us this morning. As we've talked, we're pleased with the momentum that we've been able to build right across all of our businesses. And that's one of the most pleasing aspects of this result, is that every business in our group has contributed to an improved performance, and I want to again thank our team for their incredible efforts across the year. We're pleased that more customers are choosing Woolies. We've got momentum, and we plan to continue to build on that in the year ahead. Thank you.

Thank you for standing by, and welcome to the Woolworths Group F '26 Q3 Sales Announcement Analyst Call. [Operator Instructions]

I would now like to hand the conference over to Ms. Amanda Bardwell, Managing Director and CEO of Woolworths Group. Please go ahead.

Good morning, everyone. Thank you for joining us today for Woolworths Group's third quarter sales results for the 2026 financial year. I'd like to acknowledge the traditional custodians of the land on which we meet today, Dharug country, and pay my respects to elders past, present and emerging.

Joining me this morning are Stephen Harrison, our Chief Financial Officer; Annette Karantoni, Managing Director of Woolworths Retail; Sally Copland, Managing Director of Woolworths New Zealand; Amitabh Mall, Managing Director of Group eComX; and Dan Hake, Managing Director of BIG W.

Before I turn to our performance in quarter, I'd like to recognize the uncertainty that the conflict in the Middle East is creating for our customers, suppliers and team. While the impact on the group to date has been limited, higher fuel costs and secondary effects are likely to have an increasing impact on inflation as we move through the calendar year. However, I am confident that we are well positioned to navigate the current environment.

Our primary focus since March has been to take the necessary steps across the group to minimize the impact on our customers while also recognizing the genuine cost pressures being felt by our suppliers and transport partners. We have mobilized rapidly to respond to this environment, and we're engaging with the government as their [indiscernible] plans are developed.

We have already implemented a range of measures to support inventory availability and supply chain resilience and are supporting our transport partners through regular fuel price adjustments.

For our customers, today, we have committed to a price freeze on 300 of our own brand and exclusive brand basket essentials, including chicken, pasta, sausages, nappies to provide more certainty at checkout. This price freeze is in addition to the existing lower shelf price program and the thousands of weekly specials that we offer to our customers to provide more value.

We have also encouraged use of the existing Woolworths fuel discount at Ampol and EG Ampol sites and are seeing higher redemption rates.

Turning now to our quarter 3 sales results. The group's overall performance in the quarter was stronger than by Australian Food, supported by further progress on our strategic priorities in the quarter. While group customer metrics remain above the prior year as a result of improvements in key metrics like value for money and out of stocks, we have seen a decline compared to quarter 2. We're letting a normalization from the Christmas seasonal peak, a rapid reduction in consumer confidence and some disruption during the quarter. We're building trust with customers and ensuring that we continue to provide meaningful value is even more critical in this environment.

Now turning to the performance by business. In Australian Food, total sales increased by 5.9%, with Woolworths Food Retail sales also increased by 5.9%. Excluding tobacco, Woolworths Food Retail total sales increased by 7.3%, supported by eCommerce growth of 23.8%.

Sales growth in quarter 3 was largely driven by item growth with an increase in customer transactions and items per basket compared to the prior year, reflecting investments in value, fresh and convenience that resonated with our customers. Growth also benefited from cycling the residual impacts of industrial action in the prior year, which normalized over the course of the quarter as well as some pantry stocking in March.

By category, growth in fresh and grocery food was strong, both growing in the high single digits. In Fresh, Meat and Seafood were highlights. And in Grocery Food, we saw strong growth in Drinks, Snacking and Health & Wellness.

Everyday Needs growth rates improved compared to the prior year following action we took to address range and pricing gaps in key categories as well as providing more value to customers with market-leading promotions. Within Everyday Needs, Home Essentials showed the strongest improvement driven by strong promotional plan, particularly in storage and cleaning.

During the quarter, we ran the most successful baby event since 2023, which was supported by [indiscernible] relaunch of our little ones, nappies and wipes.

In pet, we introduced almost 80 new [indiscernible] and [indiscernible] own brand products to our range, supporting solid growth. Billie's Bowl was also launched in Woolworths Supermarkets during the quarter as we began to leverage the strength of our Petstock owned brand portfolio. However, growth in Everyday Needs remained below the other categories, and we know we need to do more to improve our competitiveness in this space.

Average prices, excluding Tobacco in quarter 3, declined 1%, driven by deflation in Fruit & Vegetables due to increased supply in berries and capsicums and deflation in Grocery Food reflecting lower shelf prices. This was particularly offset by higher Meat prices, which continued to be impacted by rising livestock costs.

Building inflammatory pressures from the complex in the Middle East do not have a material impact in quarter 3. In eCommerce, sales increased 23.8% compared to the prior year. Growth in sub-60 propositions almost doubled compared to the prior year, supported by the continued expansion of MILKRUN and our new partnership with DoorDash, with on-demand delivery now available in over 70% of the network.

Direct to Boot Now sales more than doubled compared to the prior year, supported by network expansion.

Cartology revenue grew 14.4%, driven by several successful promotional events in the quarter, including Easter and the Fissler Cookware continuity program in Woolworths Supermarkets.

Everyday Rewards and Services growth was strong, driven by continued growth in Rewards and Mobile. A highlight was the strong member engagement we saw during the quarter following investment in Rewards offers to return more value to customers with active members reaching a record of 10.7 million.

Campaigns launched in the quarter include Points Blitz, Boost your Budget and the Fissler Cookware continuity program also helped drive strong engagement.

In Australian B2B, sales increased by 4.9%, driven by B2B Food with solid growth in PFD and export meat sales. On an Easter-adjusted basis, PFD sales slowed somewhat in March compared to prior periods, reflecting more caution from PFD's Food Service customers. B2B Supply Chain sales were below the prior year due to declining Tobacco sales in state independent wholesalers in Tasmania, third-party supply chain sales through PC+ increased on the prior year, reflecting higher volumes across road and rail freight.

In New Zealand, sales increased 1.4% or 2.1% on an Easter-adjusted basis with a more subdued growth rate in the quarter, reflecting lower market growth at a competitive environment as well as some disruption from the new store operating model.

Customer metrics softened in the quarter, reflecting seasonal trends, operational impacts from the rollout of the new store operating model and a decline in consumer confidence. We have seen an improvement in our operating performance over the quarter and are committed to set improvements over the remainder of the year.

Pleasingly, the launch of member prices in New Zealand in March has seen an improvement in our Value for Money customer scores and supported increased member engagement reflected in improved tag rates, an increase in active members and higher rewards advocacy.

In BIG W, total sales increased 3.9% or 1.1% on an Easter-adjusted basis. BIG W's growth transaction value, including the W market, increased by 6.5%, with strong marketplace growth.

The quality of sales growth in the quarter remained strong, reflecting a higher proportion of full price sales as well as a solid Easter trading period. We saw positive momentum continue in closing, benefiting from strong sell-through of the summer ranges and early autumn/winter trade as well as solid growth in Play and Home. Everyday remains a focus with big price drops launched 2 weeks ago, delivering strong value to customers in the category. BIG W eCommerce sales increased by 17.9%, driven by solid 1P growth and strong 3P growth through BIG W market.

Petstock total sales increased by 15.9%, largely driven by the opening of 4 net new stores over the last 12 months, franchise repurchases and the acquisition of owned brand pet food and manufacturing businesses in H2 last year.

Comparable sales increased 4%, supported by a value reset, increased marketing and solid own brand and eCommerce growth.

Turning now to current trading and outlook. In Australian Food, Woolworths Food Retail sales for March and April to have increased by 5.4% or 6.5% excluding Tobacco, with underlying momentum remaining solid despite some signs of increased customer caution.

Reported F '26 Australian Food EBIT growth is still expected to be in the mid- to high single-digit range, but no longer at the upper end of the range. This reflects incremental costs associated with direct fuel exposures in quarter 4 as well as investments to support customers in managing their budgets in a period of rising inflation, including the price freeze we've announced today.

In New Zealand Food, market growth has continued to [indiscernible], and the market remains highly competitive. While New Zealand Food's transformation will continue in progress will be slower than previously anticipated with lower sales growth and higher fuel costs and store operating model disruption expected to result in H2 EBIT being modestly below H2 F '25. F '26 EBIT is still expected to be up of F '25.

While BIG W sales remains modest, the quality of sales is strong. BIG W remains on track to deliver positive EBIT and cash flow for F '26 in line with previous expectations.

It is still too early to predict with any certainty the direct and indirect impacts on F '27 from the conflict in the Middle East and how this will impact customer shopping behaviors. We will provide further update at our F '26 full year results in August.

Finally, we acknowledge that the ACCC court proceedings against us is concluding today and tomorrow. As the case is before the court, I won't be commenting on the proceedings.

Looking ahead, while the outlook remains uncertain, by putting comes first, maintaining a strong focus on productivity and cost discipline, I am confident that we can navigate the current environment to continue to build a stronger, more resilient business while balancing the needs of all of our stakeholders.

I would like to finish by thanking our team for their hard work and commitment to our customers.

I'll now turn the call over to the operator questions to give everyone a chance, can I please ask that you limit it to one question per person, and then rejoin the queue with any follow-up questions. Thank you.

[Operator Instructions] Your first question today comes from Shaun Cousins with UBS.

Just a question on the outlook for inflation possibly for the remainder of calendar '26. Woolworth seems to be accepting fuel-related price increases in fresh, and I think inflation is commencing in say milk. But I'm curious around the outlook for long-life prices, like branded dry grocery suppliers have rising costs, some coming from with Primary Connect division. So should we expect to see a lift in dry grocery prices, including list prices or will these branded supply costs be absorbed by Woolworths? So you have lower gross margins. You seem to be lowering your gross it in own label with price freeze but not in branded? Or will you be seeking suppliers to absorb these costs related to the Middle East, recognize there's a process to deal with this with supply costs and there's nuance sort of by category, but just keen to understand the outlook for food inflation for Woolworths given the step-up in drug grocery supply costs, please?

Yes. Thanks, Shaun, for the question. And so just to start and say, of course, the full impact of the Middle East is known to all of us. And we, too, like everyone, are navigating that as we engage.

We are expecting to see price increases come through from our Long Life suppliers. What we've called out today is to say the initial wave of requests has been very focused on Fresh, as you would expect. So fruit and vegetables into the bread and milk, for example. But we certainly are seeing now an increasing number of Long Life suppliers reach out for a conversation around their individual circumstances as it relates to some of those grocery products that you're referring to there. And so we would expect to see some of those prices increase across the calendar year. The timing of this is, of course, uncertain in such an individual conversation. What we're focused on in those discussions is, first and foremost, to make sure that we're creating the right value for customers right now. We've been really clear about our commitment to that. It's incredibly important that we continue to build price trust with our customers at this moment and take all of the learnings of the last inflationary events and make sure that we're as transparent and is up-front as we can be with our customers whilst also managing the needs of our suppliers. And so each one of those conversations are happening individually. On Long Life, it has only been in the last couple of weeks that we've started to see some of those requests come through.

And I might just a net pass to you just to give us any other insights on what we're hearing from suppliers, particularly as we're shifting now from not just the conversations with our Fruit & Vegetables and Fresh suppliers but also into now Long Life and Grocery categories.

Yes. Thanks, Amanda. I think it's becoming more apparent to those suppliers that the impact of those fuel increases that have happened over the last few weeks and months. A lot of those larger suppliers have further outlooks and commitments on fuel and so it's really only starting to impact their future pricing from now. As you can imagine, we are working through those at a case-by-case basis and on an understanding the impact of those increases on each individual supplier and the range that they carry and lifting our customers. And on a needs basis, we'll be making those decisions around the the price increase itself and then where necessary, the flow-through if we have to. And of course, we're trying to mitigate as much as we can that impact to our customers.

Your next question comes from Michael Simotas with Jefferies.

I know there are a lot of moving parts and things moving quickly, but I just want to sort of delve into the impact that you're expecting to see in the '26 year a little bit more. You upgraded food guidance in February, obviously, before the conflict started. Your commentary suggests to date, there hasn't been much impact at all, which suggests that the downgrade is really driven by your expectations for trading over May and June. So I just want to confirm that that's right. And then, do you think there's an ability to recover some of that in time, and it's just because this has all moved very quickly? Or is it just that you need to absorb this and if we see continued pressure, you'll continue to absorb it?

Yes. Thanks, Michael, for the question. And so that's absolutely correct. We haven't seen any substantial impact in quarter 3, and we've called that out. What we are experiencing in quarter 4, however, is firstly, the direct fuel impacts on our own transport operations across supply chain. So from distribution centers to our stores and then also across our very extensive eCommerce network as well. And so we're experiencing an increase there in our fuel costs. So that's certainly a factor that, as you say, we were to wear off when we last spoke in February.

And then the other is the commitment that we are giving to our customers around being there for them now in this time of great uncertainty. And so the announcement around price freeze is also an investment that we're obviously making in creating that level of certainty alongside our commitment to continue to grow the top line sales of the business. And so in doing that with all of our existing promotional activations, lower shelf prices and the like, that's really what's driving the adjustments that we have announced today.

In terms of the further outlook on your question around recovery over time, for us, that becomes a focus around our own productivity and efficiency. This -- we've already signaled very clearly in August, our commitment to being an incredibly efficient retail business going forward. And so as we go forward now with the current outlook for customers where they are under pressure, the inflationary impacts coming through from our suppliers, our commitment to an always on cost discipline, is incredibly important over the next 6 and 12 months ahead, and we're focused on that as well as we look for ways to manage this to the benefit of all of our stakeholders.

Your next question comes from Adrian Lemme with Citi.

I just wanted to clarify on fuel. We've seen a dramatic reduction in the last couple of weeks in both petrol and diesel. So is the fuel commentary driven just by what you've seen in April? Or are you expecting fuel sort of rebounds from here, please?

Yes. Thanks, Adrian, for that question. So we're looking at fuel on the basis of everything we just talked about, which is really only in our transport operation. And Steve, perhaps you might just want to talk about how we've been managing our hedging as well, which is part of the consideration here?

Yes. Thanks, Amanda, and Adrian. I think there's a couple of dimensions to it. There is uncertainty on what happens on fuel prices, right? They were over $3.20 a few weeks ago, $2.64 what drove passed on Tuesday. $2.50 this morning. And so you're seeing a lot of volatility on fuel price. I think what we don't know is what will happen moving forward.

Probably the other dimension that's worth just contextualizing in all of our transport contracts, we do have fuel rise and fall mechanisms, but they have a time lag to them. And so some of the impacts of those higher fuel prices will flow through to us in the fourth quarter. And so we do know that some of those impacts that we've seen earlier do have a lag impact for us. We have had some hedging in place. We do have hedging in place for the second -- sorry, for F '27 as well. And so we do think that there is an impact on this part of what we've called out in our earnings outlook, but we are aiming to manage it as effectively as possible into F '27.

Your next question comes from Tom Kierath with Barrenjoey.

Just got a question on the impact of pantry stocking. I noticed that the sales growth accelerated through the quarter despite lapping some industrial action earlier in the quarter. Are you able to just give us some numbers there on what you think that pantry stocking impact was just cognizant that we'll lap it in a year. And I just want to have that kind of I guess, settled in the base.

Yes. Thanks, Tom, for that question. And so yes, we did see some pantry stocking in March, which did result in an uptick in sales. And it wasn't -- if I could just say right across the network necessarily, there are actually pockets, particularly regional areas, where people have to travel further where we saw actually a greater level of pantry stocking.

We're not going to be able to share the specific numbers on what we saw, but I would just suggest it's relatively a modest number. It happened. It caused us to actually increase our own inventory holdings as well to make sure that we're in consistent supply on particularly those pantry products. But today, we won't be sharing the specific number.

If I give you a sense of the shape of the quarter just in terms of the sales outlined, January for us was very strong. There was a slight step back in February as customers came to in terms with the breaking news around the inflationary outlook, the rate increases into the latter part in early March, the Middle East conflict. In March, we did see that sales line pick up, as you say. So March was strong.

I'd also just call out when we're looking at March, Easter is not like-for-like. And so there's a lot of noise yet again in the way that we need to look at the numbers. And so if you look at March, Easter is not comparable. School holidays was also not fully comparable as well. And that's why we've shared today that number with March and April in there so that we're able to give you an indication of that full period so that when you're comparing year-on-year, you can at least take that into account.

Your next question comes from Peter Marks with Goldman Sachs.

Just a follow-up on Michael's question, trying to understand the split of the downgrade to the LT Foods EBIT growth expectations. Can you give us a sense of, I guess, of the split between the impact of fuel costs and the price investments you're making? But we thought like sales are probably growing faster than you thought they would in February, so maybe that could have offset the fuel costs? And that would leave like a pretty chunky price investment, I guess, on my math. So yes, anything you can give us on the split, I think, would be helpful.

Yes. Thanks, Peter. So in terms of the fuel impact, the fuel impact, the direct fuel impact on our transport operations is estimated at the moment. And again, as Steve just called out, to news to move and is volatile between $15 million and $25 million for the quarter. So that's our estimate. We're not providing an estimate on the investment that we're making in price freeze, which is our commitment to absorb any increases that we receive from our supplier partners during that period.

If I come back to your question on sales, what we're very mindful of this consumer mindset in terms of customers are under immense pressure, great level of uncertainty. We had a strong Easter trading period. And as we've come into now April, we have seen that the cycling impacts with ANZAC Day trading hours being adjusted in various states has made it actually a little difficult for us to get a real sense of these early weeks of momentum into April. And so if you're sensing that level of cautiousness, that's really what we're just indicating is we're very satisfied with our sales momentum overall.

We're cycling a lot of noncomparable periods right now, and we're very mindful of just the consumer mindset right now, great level of uncertainty I would say, peak actual stress that we've seen in the way that we've been tracking our customers for many years now. And so we're just mindful of how that might play out in the coming weeks and months.

Your next question comes from Caleb Wheatley with Macquarie.

Maybe a bit of a follow-up to Peter's question just asking in a slightly different way. Appreciating going to comment specifically on the price freeze initiative but there's been several comments throughout the prepared remarks around kind of investment in value, and you mentioned loyalty as part of that. Just relative to kind of where your outlook was in February for the Aussie [indiscernible] business, how do you think kind of all of the required investment in the customer has tracked in terms of expectations relative to a month or 2 ago, please?

Yes, I'll give you a sense of that, and then I'll also hand to Annette so that she can share her perspective on that. I would say that compared to when we spoke in February, we've been increasingly satisfied actually with the investments that we've been making in value and how that's translated into some very strong sales momentum and also some ongoing share gain across that period. So when we look at the value of those investments, whether that be our commitment to lower shelf prices, the commitment to giving more value back through everyday rewards and indeed our commitment to making sure, by the way, that when the customer comes into our stores, the products are on the shelf and they're having a great experience in store. All of those investments that we made around the fundamentals, we believe, have been a key driver of item growth both in our stores and in eCom across the quarter. And we're certainly feeling satisfied as we've come out of these last couple of weeks post-Easter.

All we're just calling out here is a very noncomparable period that we're cycling. We've also got a very uncertain customer, and therefore, the outlook, we're just cautious as we look forward on that, but we feel that we're in a really strong position overall to be able to navigate it. But we want to make sure that we are there for customers. That's a very clear message that they've been giving us. And we're making a clear decision as a team to make sure that we take the learnings of the last inflationary cycle and show up in the right way for all of our stakeholders. So Annette, if I just come back to the core question here around just the sales momentum that sense of value that we've created from those investments. Is there anything you'd like to add on to that?

I think you're right. This really is an end-to-end execution focus when you look at, yes, we need to get those offers right for our customers and work really hard with our supplier partners to get the right products and off into our programs. It also is a very strong end-to-end piece of work with our replenishment and supply chain and store team to make the right inventory in the stores to make the best of those moments when our customers are in our stores.

Some of those investments, and I'll probably take everyday need is the category that was a big focus for the quarter. We moved out of multiple quarters of not seeing unit growth into the first quarter in Q3 of seeing that unit growth well above 2% in item growth for the quarter. And those very specific investments in -- whether it was in EDLP, through the pet category, the relaunch in baby and some really called LSP lines and collaborations with our suppliers in personal care, it really did drive customers back into those key categories that we really wanted to shift momentum in. So maintaining that core business, growth in fresh and grocery but accelerating everyday needs was certainly the place we're investing.

Yes. And I think that's absolutely right. And so those investments that we're making are choices. They're driving that top line sales and that momentum, but we're really focused on going forward is to say we want to drive item growth at Woolworths and get that flywheel moving faster than was certainly 12 and 18 months ago. So for us, that is about investing in all the places and that you just called out, thank you, so that we can get that sales momentum. And of course, then us being super efficient on the way through.

Your next question comes from Craig Woolford with MST Marquee.

My question is on a similar theme here. As you called out, you had very strong item growth. so i can understand a bit more about the promotional intensity that played out in the third quarter. Can you share what proportion was sold on promotion and whether that was higher or lower than a year ago? And we understand from various forms of feedback that you're looking to put more products on lower shelf price or LSP, what are the targets there over the next 12 months?

Yes. Thanks, Craig. So yes, we are very pleased to see the item growth, particularly the item growth that we saw in our stores, which, as you know, has been a key focus of our team's attention over the last 6- and 8-month period. And so firstly, I'd just call out that item growth, we believe, is primarily driven by improved availability a more disciplined execution in our stores and, frankly, just better merchandising as well. So that is a key driver.

Promotional intensity in the quarter certainly did increase on last year but was actually flat to H1. And so I think that's important to call out. And as you know, we are very focused on making sure that we get the right balance between those yellow promotional specials, which we know customers love and the lower shelf price commitment that we have, which customers are also searching for. That sets of certainty and reliability is, we believe, has always been important and has now become even more important. So we have between lower shelf price and EDLP now over 3,000 lines that are within those programs. And yes, it is our intention to continue to focus on expanding that in the right way. We want to make sure that they're on the right lines that matter for customers and that are well suited to that program.

We're always going to have specials as well. It's about getting the right balance by category right across the store is what we're really focused on there.

Your next question comes from Bryan Raymond with JPMorgan.

Steve, another one on gross margins and the sort of second half outlook. That $15 million to $25 million of fuel impact is a helpful gauge there. So if we take the midpoint, that's about 8 basis points in the second half to gross margin. On my math, if you're in the range of sort of 5% to 7% good EBIT growth, you probably have in the order of 30 to 40 basis points of gross margin decline in the second half and obviously, there's some positives in that margin bridge. So I just wanted to understand sort of the magnitude of price freeze. I know you mentioned before, it's sort of holding prices as opposed to dropping necessarily. But I just want to sort of understand I'm missing something in that bridge because it's a reasonable second half decline in gross margin, and fuel is one part that's probably only 1/3 or 1/4 of that. So is there any else I'm missing there?

Thanks, Bryan, for that question. I'll kick off and then Steve got any build, let us know. Look, I think the fuel you've called out, and that's something we wanted to be clear about in terms of the direct impact. We're not going to share the impact of the price freeze and that itself will unfold across the quarter.

It's also the case that values become even more important than it was in February. And I just couldn't emphasize that enough. When we look at all of our tracking with customers, 24% of customers are experiencing real budget pressures in struggling to make ends meet. Many customers are calling out certainly a search for more value overall. And in fact, many are also indicating that they're going to do things like cook more at home, for example, to save on eating out and spending at restaurants and the like. And so every way in which we track where consumer sentiment is up to and potential shift in behavior says that value is going to become even more important.

And so of course, in this quarter, we're very focused on, yes, putting the price freeze, which is really about putting a ceiling on current prices of those 300 products, but we also want to make sure that we are absolutely there from a value perspective and that we continue to build on the positive sales momentum that we've been tracking now since quarter 2. We're very pleased with the turnaround that we saw in quarter 2, the momentum that builds from a sales perspective and a customer perspective into quarter 3. And we certainly want to make sure that we're maintaining and bringing customers with us over this quarter 4 period, even though there is a high level of uncertainty and values become even more important.

And so we are, of course, within that putting a strong emphasis on making sure that across all parts of the store, we're providing great value. And that can be in places like meat, where we are seeing certainly an increase in livestock prices come through. But that's a core part of the customer basket, as you know, and certainly an area where we're continuing to invest to make sure that customers have got affordable offers in the meat category, for example, which we believe is important. And that's called out already the investments that we've been making in Everyday Needs.

And we've started to see, again, some positive signs from those investments in terms of item growth. Certainly, it's moderated somewhat the ASP in some of those categories as we've activated those plans. But our intention is to continue to build price trust through our actions around the price freeze we've announced, continue to build momentum through investing in value and make sure that we drive that top line.

Steve, is there any other sales you'd have?

No, I -- it's a sales announcement. Yes, we have given earnings and earnings update, but we don't, Bryan, want to get into the details of gross margin bridges, there are many drivers of the mix and the sales and the margin and the cost that we're trying to manage. And so we're trying to give an update on what we think the key drivers are today, and we'll look forward to providing more detail on all this.

Your next question comes from Michael Toner with RBC Capital Markets.

Just actually on availability, I'm curious how availability is tracking in store more recently and like particularly over the last month and how you expect that to track through the, and is that related at all to the sequential drop in Voice of Customer for the Aussie Food business just because going from 52 to 47 in the space of a few months does seem like quite a sizable drop on face value, but acknowledging that there's some natural seasonality in there, too.

Yes. Thanks, Michael, for that question. So as you say, the Voice of Customer scores generally in quarter 3 do moderate on the performance that we see in quarter 2, and so we did see that seasonal impact.

We also had a number of disruptions across the quarter. And when I say a number, it's actually something like 13 different types of events that happened across the country, whether it was cyclones, floods or derailments as well, which do have an impact on customer experience. And so that we need to factor that in alongside just the uncertainty in the environment right now. We know that we're seeing consumer confidence at a broader level, sitting at all-time lows. And so we think that has also had somewhat of an impact in terms of our subdued Voice of Customer Scores. I mean we're always focused on the fact that we need to do better.

However, when we look at performance in the individual breakdown on Voice of Customer, the two that actually really stand out as the strongest performers are actually arguably the two that matter most, which is on value for money and also on out of stocks from our customers. And so yes, it's one we're watching very closely because we know how important that experience is, but there was a lot of other operational disruptions that has potentially played a role there.

Annette, I don't know if you've got any other builds on Voice of Customer?

No, maybe just on availability though. I think there was some good improvement on last year, marginal improvement, I should say, on last year with all those disruptions taking into consideration. I think that there were some good disciplines and practices just around getting that inventory back in flow. We did see some good improvements in meat as an example, and chiller with some categories moment in particular. But yes, it was a challenging period with those disruptions that you talked to. But it's hard to say stabilize because you never know when those are going to occur. But I think our discipline and agility around solving that is actually very strong.

The next question comes from Phil Kimber with E&P Capital.

My question was just around you mentioned a lot about the consumer uncertainty that you also talked about things that Woolies can do to help manage it themselves. So without giving obviously numbers, but the customer of a reset program and other cost savings, should you just remind us the work that you're doing on there and how they might flow through over the next 12 months?

Yes. Thanks, Phil. So yes, absolutely spot on. We're really focused on what are all the things that need to mitigate the impacts here. And so that starts, first and foremost, with us continuing to drive strongly our store productivity and distribution center productivity. And so that continues to be a big focus for us, particularly as we think about supply chain and the substantial investment we've made there in Moorebank. In the year ahead, it's incredibly important that we continue to see the positive implementation and ramp up of those facilities and that they start to deliver some of those improved productivity benefits. And so that's certainly a big focus for the team.

In our stores, of course, there's an always on focus on how we best continue to manage productivity. And then as you know, we're also very focused on how across our support offices, we continue to find ways to be more efficient as well.

In the past, we've always been very focused on our stores and our distribution centers, but it is equally important that in support, we look for ways to be more efficient, and that's clearly going to be important in the year ahead. When we look at then also the way that we are managing the business, for us, it starts with making sure that we're driving sales and unit growth. That's where it all starts for us, hence, our focus on making sure they're offering great value.

And the customer offer reset program is very much a systematic opportunity for us to go through category by category and make sure that we have got the right offers for our customers that it's easy for them to shop and find value at the different tiers and that we're driving at the same time important unit growth for our supply partners as well. That's a really important part of that program. And so this is actually a good time from our perspective to be well and truly now set up with that program and starting to see that flow through all of our categories over the coming months is important and good timing. So there's many things we're doing across the board. But from a team perspective, we are very clear that we need to play our part here in making sure that we're as efficient as possible across all of our levers.

Your next question comes from Richard Barwick with CLSA.

And you've talked a lot, we've talked a lot on the call about what you're doing in terms of the pricing and value, can you give us some commentary on how you're seeing the competitive environment in terms of what you're seeing from competitors because I think value is very much a relative game. So it sounds like you're happy that you've sort of improved your relative value. But yes, just love to hear some commentary there in terms of what you're seeing from competitors just on those metrics.

Yes. Thanks, Richard. Well, it continues to be a very competitive market. But certainly, that's continued from quarter 2 into quarter 3 and into quarter 4 as well, I would say. Overall, it's also been a relatively rational market. And so that's important, as you know. And so we are seeing strong competition. I think particularly in areas like eCommerce, for example, where it really has continued to ramp up in terms of the customer interest in eCommerce as part of their grocery shopping but also in terms of the competition. So whether that's our main competitor or whether that's the introduction of Aldi, Costco through DoorDash, Coles with Uber Eats, that continues to be a very hotly contested market.

And when it comes to value overall, there is the rational value, as you say, and then there's a perception and that continues to be an opportunity for Woolworths to improve our price perception and hence, why you see us continuing to take the opportunity to make sure that as customers are under pressure, that we are doing the right thing and being there for them because that is what creates long-term momentum and value for the business and for shareholders ultimately.

Okay. And just to clarify on that point, if you're saying that the market is rational but competitive. Does this mean that you're not seeing anything alarming or any sort of behavior in the market that you should be calling out?

No, we're not seeing anything that we would call out. It's competitive. It's always very competitive, as you know. And apart from eCommerce that I called out specifically because we've got entry into some new channels for some of our competitors and you'd expect to see it a little bit more competitive from a customer acquisition perspective, but no, I wouldn't call out anything different to what we've seen over the last 6 or so months.

Your next question comes from Ben Gilbert with Jarden.

Just a question for me. It feels there's been a bit of a shift in terms of focus around value. Like if we look at fuel and we just do the math, it looks like the fuel is probably about 1/3 of the delta for the guidance, and then there's another $30 million to $50 million into price. What I'm just trying to understand is, are you deciding this backdrop, given sort of, I suppose, criticism is in the past about not lending into your scale and position the market you're leaning a bit more into value, and obviously, Fresh is a big focus, but value and being more vocal on driving that in consumers' mind has been a step change because there's an opportunity to do that now?

And I suppose the second part of that logistics the question. It's how you're going to communicate that and win the marketing message? Because this has been an area, I think Woolies probably hasn't been as strong in the past, but it feels like you've got a real opportunity to do that now. Are we going to see a step change in messaging around how you're leaning into things like chicken, et cetera, that you put in the price as announcement today? So two parts of that.

Yes. Thanks, Ben. Look, I'll just reinforce what I've already said, which is all about tracking, whether it's our research, whether it's the behavior that we're seeing from customers, value is increasingly important. So it is more important than it was when we last chatted in February and hence, why we are continuing to put more emphasis on that because that's the #1 focus and priority for our customers.

Certainly, it's also been the reason why we've seen a good increase in terms of our sales momentum across quarter 2 into quarter 3, assisted by improved availability and execution as well. And so yes, it is incredibly important. We have seen a shift in consumer sentiment. It's not a minor shift. It's a major shift, really driven by the uncertainty. And so we see it as an opportunity to build on the momentum that we have to invest in the right places to make sure that we continue to be the first choice for the customers that we can continue to drive that item growth that we've spoken about, and we can continue to do it right across the store.

I think that's really important for us in terms of, yes, Fresh is the gateway to the Woolworths store, but we want to see that growth right across all of our grocery lines, but then importantly, over into Everyday Needs. And that's been an area that we have put increased investment and focus on, and we intend to continue to do that in quarter 4 so that we can build the momentum into the year ahead.

I take your feedback on, we could do a better job on communicating, and we can always do things better. And certainly, announcing the price freeze today, there's an opportunity for us to make sure that we're showing up to our customers and demonstrating that we listen to them that we've heard their concerns, but that we also understand that they want us to show up differently this time. And I made it very clear in the last inflationary cycle that perhaps we were slower to move than we should have been. And this is our opportunity, we believe, to build long-term trust and ultimately improve the outlook for the business over the midterm. And so we'll take your challenge on in terms of making sure that the value communication improves, but that's certainly our intention.

Your next question comes from Shaun Cousins with UBS.

Just on New Zealand Food, could you just talk a bit about the execution issues for the change in the store operating model, maybe what needs to sort of be improved or corrected and maybe when that could be done by such that it doesn't appear to be an issue anymore?

Yes. Thanks, Shaun. As you know, it was a very large change that we made to our store operating model in New Zealand. We believe it's the right change. But as we've implemented such a large change, there has been some teething challenges in terms of the execution.

I'll hand to Sally to talk more about that. The primary areas I know that Sally and the team be focused on is on availability and particularly then into eCommerce. I also know sale that we've been seeing some improved performance, certainly over the last month or so. And so we're confident that we'll get back to where we need to be. But I might just let you talk to a little bit more of the detail there.

Yes. Thank you, Amanda. Yes, it has been, I guess, a challenging implementation of a very significant change in our business. So just to contextualize, I think 3,500 new team members in the New Zealand business. And really how we've focused on that, I think from an implementation perspective, it did impact in the initial stages of our availability experience for our customers. And eCommerce, which we know is a very complex operational model for us to get right every day for customers. And so we did implement a very focused recovery plan. It has been pleasing to see actually our availability metrics both on our customer scores from a VOC perspective, but actually customer-first availability scores improving on average about 7% across the board. And so we continue to remain really focused on that and have a better offer that we are executing now for our customers. And so for us, it is about how do we embed and actually come out of this model even more strongly, so deliver a really improved result.

We've also importantly, from a team skill perspective, really wanted to embed some things like multiskilling. So, we've gone from about 6% of our team being multi-skill to over 20% of the team being multi-skilled. And that's an important unlock for us to provide meaningful hours for our team, but also to be able to better service our customers on a longer term basis.

Thanks, Sally.

Sorry, does that mean it's resolved now or it's going to be resolved during the fourth quarter? So it seems to have gotten better? Is it really more something that's been isolated, the issues have been isolated to the third quarter?

It was, I think, the biggest impact certainly in the third quarter, but we importantly remain very focused in the fourth quarter to make sure we've got it right. across 190 of our stores. So we're tracking every single store in terms of that recovery and performance and then making sure, importantly, that we, our customers know that we are back to business and trading really well and that we're focused on recovery from a customer-driven perspective, and that is a part of the fourth quarter focus also.

Thanks, Sally.

Your next question comes from Tom Kierath with Barrenjoey.

Just wanted to ask a question on the delivery fees and whether they've gone up as a result of what's happened with fuel. I noticed that eCommerce growth is pretty strong in the quarter? And just kind of what, thinking about what your plans are there to recover some of the higher fuel costs in that channel, in particular?

Yes. Thanks, Tom, for that question. And we're pleased to see that step-up in the eCommerce sales growth across the quarter. And as you'll know, we also added for Sunday a service fee earlier in the year as well. And so we are very mindful of getting the balance right again there around the cost of serving customers in this channel with the convenience and the value that they experience. And Amitabh, you just want to talk about how we're thinking about that on the go forward?

So maybe a couple of things there. And firstly, for our customers who are having it tough right now, the best option for -- to manage their cost actually still to come into stores and shop in our stores. Most of our customers live within 10 minutes drive in store. But a number of them prefer the convenience of shopping online, and we do have thousands of vehicles running on the road any given day and a few million kilometers that we will drive every week. So just being very mindful that there is a cost increase, and we are looking at all options quite carefully.

Amanda, you did reference the service fee increase. And what we saw in that is a number of customers who prefer to still shop on Sundays, kept the business on Sundays, and we're happy to pay the premium on Sundays, and quite a few actually moved it to other days of the week. So it's for us to make sure that we are providing all possible options to our customers and giving them the value of the convenience that they really care about while managing, obviously, the profitability of the business.

Thanks, Amitabh.

Your next question comes from Bryan Raymond with JPMorgan.

Just quick one. Just back on the pantry stocking issue. It sounds like that's kind of largely in the past. I mean who knows how this issue evolves around Iran and diesel and so on. But I just wanted to understand that that's probably going to be a bit of a headwind in the June quarter, it was largely in March. I'm not sure why we wouldn't try to quantify it here. Just is it because it's not meaningful in terms of basis points or percentage points of growth because we're going to probably pick up a bit of a slowdown in sales momentum? I just don't want this to come up in the future when it's not called out now. So is it that it's not meaningful or that you just don't want to call it out from -- for some other reason, just so we can give out our 3Q to 4Q profile in terms of sales growth?.

Yes. Thanks, Bryan. Look, it certainly was a pattern that we identified pretty quickly. So it's a very real behavior and the shift that we saw from some customers. As I said, it wasn't necessarily even experienced in all stores. And so we're not going to call out the specific number. What we're mindful of is, and that's why we shared that 7-week number so that you were able to have a look at the like-for-like relativities across Easter, across school holidays, the industrial action cycling out in March, and so not in those April numbers. And then, yes, you've got the pantry stocking that did occur in March as well. And so all of that is actually quite noisy, as you know.

And so I appreciate why you're asking the question, but we're not intending to share that number. It happened over, I'd say, a 2-week period, and it has dissipated. We've not seen it return. And obviously, as you'd imagine, we're watching it very, very closely. And so we didn't think it was significant enough to call out.

Your next question comes from Michael Simotas with Jefferies.

I know it's a sales call, but you've changed guidance. Was there anything in CODB that's going to play out differently in FY '26 to what you expected when you gave us the last update in February? And as an example, I presume there's no provisioning that you need for the junior wage rates.

Thanks, Michael, for that question. Yes, CODB wasn't the driver of the change that we've announced today. And Steve, just on...

No. I mean we've continued to invest in our stores to drive availability. And I think that's part of our plan to make sure we're driving the top line.

In terms of the junior wage rates, minor setting does come until the end of the calendar year, so there's no provisioning. There's no significant shift in our outlook on CODB other than just the volume-driven variability of costs that drive most of the cost of our business.

Got it. And you'll just take the increase as it comes through in December?

Yes.

That is all the time we have for questions today. I'll now hand back to Ms. Bardwell for closing remarks.

Thank you for joining us today. I'd like to reinforce that we are pleased with the sales momentum that we saw in quarter 3 and the execution and the commitment that the team has demonstrated during this period as we navigate uncertainty due to the Middle East conflict. The 13 different disruptions that I called out earlier that happened from weather events across the country. And we are determined to be there for our customers right now at this time, of great uncertainty whilst also balancing the needs of our suppliers so that they remain viable sustainable and also delivering long-term value for our shareholders. To do that, we know we need to continue to be even more efficient going forward, and we're committed to doing that together as a team. Thank you for joining us today.

That does conclude our conference for today. Thank you for participating. You may now disconnect.

Thank you for standing by, and welcome to the Woolworths Group FY '26 Half Year Earnings Announcement. [Operator Instructions]

I would now like to hand the conference over to Amanda Bardwell, Managing Director and CEO.

Good morning, everyone. Thank you for joining us today for Woolworths Group's half year results for the 2026 financial year. I'd like to acknowledge the traditional custodians of the land on which we meet today, Darug Country and pay my respects to Elders past, present and emerging.

Joining me this morning are Stephen Harrison, our Chief Financial Officer; Annette Karantoni, Managing Director of Woolworths Retail; Sally Copland, Managing Director of Woolworths New Zealand; Amitabh Mall, Managing Director of Group eComX and Dan Hake, Managing Director of BIG W.

I will start with an overview of the group's performance in the first half and then provide an update on our medium-term strategic priorities. Steve will then cover our financial performance before I conclude with an update on current trading and the outlook for H2.

Turning to Slide 4. We took deliberate action to rebuild customer momentum during the half through investment in the areas that matter most to our customers, including value, fresh and convenience. We are seeing greater stability across the group following key leadership changes and structure changes that are better aligned to our priorities and our execution in the half has progressively improved. However, we know we have more to do to deliver the best experiences for our customers.

Turning to our financial performance for the half. Group sales in H1 increased 3.4% and with all businesses growing sales on the prior year. Group EBIT, excluding significant items, increased 14.4% with solid EBIT growth from all of our reporting segments, supported by CODB reductions. Excluding the impact of industrial action in Australian Food in the prior year and supply chain transition costs, group EBIT would have increased by 7.9%.

In August, we spoke about taking action to reposition the group for long-term sustainable growth, and we laid out our strategic priorities. While the key focus in the half has been on rebuilding momentum in the short term, we have clear strategic agenda and have made good progress on these priorities. We also said that we expected to deliver mid- to high single-digit reported EBIT growth in Australian Food for the year and an improved result in New Zealand Food and BIG W. We remain on track to deliver this in F26.

Turning to Slide 5. Customers remain value focused. We have seen value-seeking behaviors continue in an increasingly competitive retail environment. Broader cost of living pressures continue to weigh heavily on our customers' household budgets. Price remains the top priority for Australian customers when choosing where to shop with quality and freshness and range also critical. After signs of tentative improvement in customer sentiment towards the end of last year, persistent inflation and the prospects of interest rate rises have seen customers again prioritizing ways to save. They are telling us that compared to last quarter and a year ago, they are buying more products on special comparing prices across supermarkets and cooking more at home.

Turning to Slide 6. We're clear in quarter 1 that the sales momentum in Australian Food was below our aspirations. And in response, we invested to improve our offer in value, fresh, availability and convenience. We upweighted our rewards and e-commerce offers as well as increased weekly promotions on key family lines like bananas, nappies and chicken breasts, to provide customers with more value and more reasons to choose Woolworths first.

We also added more than 350 new products to our lower shelf price program with over 800 products now part of the range. We know that fresh is the gateway to the supermarket shop, and we invested more team hours across key fresh categories to ensure the best offer was consistently onshore and to improve freshness and the customer experience.

We also remained focused on improving our retail execution. We held more stock weight on key promotional lines to improve availability for customers and increase the number of store deliveries over the weekends, helping to support an improvement in out-of-stocks voice of customer, which is up 10 points compared to the prior year. In December, we unlocked $1 million more online and delivery pickup slots to provide our customers with even more flexibility and convenience in the lead up to Christmas. We also provided highly competitive offers to new customers.

Turning to Slide 7. The actions that we've taken have seen improved momentum in quarter 2 relative to Q1, with a stabilization in market share. Excluding the impact of industrial action in tobacco, Woolworths Food retail sales increased 4.7% in Q2, driven primarily by item growth, and we have seen this momentum continue into H2. Woolworths Food Retail VOC NPS ended up 10 points compared to the prior year, showing a strong recovery from the impacts of industrial action in the year. In addition to out-of-stocks, which I've mentioned, values the money scores have also improved consistently over the last 12 months, up 8 points on the prior year.

Turning to Slide 8. We're also transforming our digital experience to deliver the best shopping experiences for our customers. The number of customers using our digital tools to improve their shopping experience is increasing. -- whether this is to make the shopping experience more seamless, get the best value or track their spending. We already have over 1 million customers using digital lists to shop each week in store and online.

During the half, we launched Snap & Shop, which converts handwritten shopping list into digital left. It uses AI technology to match the items to the product the customer has bought before. I'm also delighted that Olive our much-loved digital shopping assistance is set to take a major step forward over the coming months through our extended partnership with Google. As part of this, Olive will transform into a market-leading conversational shopping companion, moving beyond the search and Q&A tool.

Through agentic AI, Olive will bring together the shopping journey for customers. making the weekly shop easier in-store and online. Olof will be able to tailor menus based on customer preferences, identify specials and boost products as well as build faster, more predictive baskets. Customers can interact with Olive in different ways like sharing a photo of a handwritten recipe or using voice to build your shopping list.

Turning to Slide 9. As convenience continues to increase in importance for our customers. Our large store network and leading e-commerce business remains a key differentiator. A modern, well-located store network is critical to maintaining our lead in an increasingly competitive space. During the half, we continued to invest in our store network to provide the best experience for our customers looking to shop in store, pick up via direct-to-boot or order a Woolworths on-demand or millrun rapid delivery.

Direct to Boot is now available in around 70% of our stores in under 2 hours and has rolled out to a further 60 stores in the half and Milk Run to a further 135 stores. We also finalized a new partnership with DoorDash, which will be rolled out in H2. On-demand options are our fastest-growing propositions as customers seek more convenience with under 2-hour e-commerce sales growing at a compound rate of over 80% over the last 2 years.

Moving to the next slide. While our primary focus has been on rebuilding momentum in the short term, we have also continued to progress our longer-term strategic priorities. We know we have world-class assets across the group, which give us a unique enduring competitive advantage and significant potential. If we deliver our strategic potential, I have great confidence in our ability to deliver long-term sustainable growth for shareholders. by delivering sustainable growth in Woolworths retail, ongoing improvements in New Zealand Food and BIG W, supplemented by higher growth from our complementary businesses and services. Our ambition is to deliver mid- to high single-digit EBIT growth over the medium term, supporting our double-digit total shareholder return aspiration.

Turning to our first strategic priority in Australian Food. Our ambition is to be the first choice for customers in our cornerstone food business. Third is what we're famous for. and a thriving food business provides a strong platform for the group's long-term success. We're making meaningful shifts for our customers to put us first and we're determined to win in fresh, convenience and range while delivering meaningful value and executing consistently well. We've made good progress during the half, but there is more to do, and this work will continue in H2.

I will call out a few highlights from the half across 5 key areas. The fresh food people promise means delivering the best quality and fresh varieties for our customers. During the half, we progressed our strategic sourcing program to increase our direct supply of fruit and vegetables from our best quality producers with a review complete for around half of our fruit vegetable sales volume. We know we need to improve our range and value across our everyday needs categories like pet and baby and we have been slower than we should have been to respond to this high competitive environment.

In response, we've already taken action to address range and pricing gaps as well as enhanced promotional activity to provide more value to customers. We are relaunching our Little Ones, Snappies and Wipes. And in Pets, we've refreshed our own brand pet food ranges, including Baxter's, Smitten and Petstock's owned Billy Bowl, which will be rolled out to stores. We have progressed our long-term strategy refresh in these categories with more to come in H2, and we remain committed to improving performance across our broader Everyday Needs category.

I have already spoken about our progress in expanding our e-commerce network and increasing our capacity to meet customers' demand. However, we've also made good progress on e-commerce productivity agenda, helping to deliver a 93% increase in e-com x directly attributable profit. These initiatives include team picking algorithms and the rollout of improved temperature signs in vehicles with the increase in profitability also supported by mix benefits from strong growth in higher-margin on-demand propositions.

Value remains critical for customers, and we remain committed to lower prices for customers and restoring a more balanced net of everyday low prices and specials. We also rewarded our customers' loyalty by providing more value through everyday rewards with new campaigns to drive member sales and a high single-digit increase in value returned to customers through points earned.

Our retail execution has continued to strengthen, with solid improvements in productivity delivered in the half. As of today, exit gains have been added to over half of our store network, supporting improved stock loss rates relative to H2 F25. We also remain focused on managing costs. through the delivery of our productivity agenda and our commitment to becoming a lower-cost retailer.

Moving to the next slide in New Zealand Food and BIG W. On our second strategic priority and is to improve the returns in New Zealand Food and BIG W. Both businesses reported solid growth during the half, supported by their transformation agendas but this momentum needs to be sustained to return to double-digit returns over the medium term. In New Zealand, we completed the rebranding of the New Zealand floor network to Woolworths and rolled out a new store team operating structure to improve the team and customer experience.

We have continued to improve our over and range to differentiate our offer and launched over 280 new products across a number of key categories, which are resonating well with our customers. In H2, we're focused on building customer momentum in a challenging and highly competitive market while continuing to progress our transformation over the medium term. We know that we can further differentiate our offer for our customers through our focus on fresh, range, convenience and everyday value.

In BW, a more favorable sales mix supported by better execution of seasonal ranges and availability in Clothing led to margin improvements in the half through a higher mix of full price sales. New and improved ranges have supported own brand growth of 8% in H1, which gives us confidence we're taking the right steps to reposition our range to provide better quality and more affordable options. The rollout of RFID technology will also deliver improvements in stock loan and availability. BW Markets expanded range continues to resonate with customers, with sales more than doubling compared to the prior year.

As BIG W's gross transaction value, including the BIG W market, increased by 5.8%. We are confident the performance of BIG W can continue to improve, but we will also ensure that BIG W has the appropriate foundation to be successful. Work has begun to separate the business from the group systems, which will enable BIG W to operate on a platform appropriate for a discount department store as well as providing the group with strategic optionality.

Moving to Slide 13. Moving to our final strategic priority, which is to grow our complementary businesses and services. These include PSD and peso as well as proof line service businesses such as cytology, everyday and Primary Connect. Collectively, these businesses contributed around 1/3 of the group's EBIT growth in the half with PSD, pet stock and rewards and services, making the strongest contribution.

In H1, we saw strong sales of double-digit underlying EBIT growth in Petstock and PSD. PetStock completed a value reset during the half investing in key products to improve customer value perception as well as launching a new pet cash loyalty program to complement its Everyday Rewards membership. While PSD growth remain strong, a highlight was the retention of key customer contracts in the QSR channel to support continued growth. We also secured 3 new sites and commenced construction of a new facility in WA to expand our national network.

Rewards and services sales increased by 8.6% and with mobile and insurance combined customers up 6% on the prior year. Cartology also continued to drive margin accretive growth for the group. PCs delivered double-digit earnings in the half through higher customer volumes and better utilization of warehouse facilities.

Turning to Slide 14. To deliver our strategy, we know we need to get the basics right by providing the retail excellence our customers expect from us. We also need to be a simpler business and increase accountability. Last year, we made significant management changes with a more consolidated and focused leadership structure. We now have key leadership in place and embedded a new Australian food leadership team, including in key commercial roles.

We are committed to retail excellence and making every dollar count. We have delivered our $400 million run rate cost savings target by December. This has helped us to deliver a reduction in CODB as a percentage of sales in the half as well as fund investment in customer value. Key areas of savings included support office roles, goods for not resale and marketing and IT spend. This has helped us reset our cost culture as we restore and always on low cost discipline across the group. However, we recognize that for productivity improvements to be sustainable and need to be driven by improving our processes and reducing work for our teams. And our leading AI foundations are already helping us do this, which I'll talk about more on the next slide.

On Slide 15, over the past decade, we've established strong foundations to leverage AI through significant investments in digital and data capabilities. We have integrated capability into every part of our business. and are now focused on unlocking the next phase of AI to deliver better experiences to customers, team members and to transform our operations and internal processes. This slide shows some of the areas where AI is already making a difference. We're delivering market-leading customer experiences through customer chatbots, which has helped us to automate over 60% of customer service contacts freeing up our team to focus on more complex customer inquiries.

Our personalization engine is already delivering millions of tailored offers to our customers every week and I've spoken a not our extended partnership with Google to transform Olive, our digital shopping assistant. In our operations, we've leveraged AI to optimize e-commerce fulfillment for over 0.5 million weekly orders including shortening pick paths for our team members and optimizing last mile delivery routing. We rolled out Gemini for Workspace to our support of the team almost 2 years ago, and the adoption has been incredible. Today, 2 in 3 of our support office team members are using AI tools multiple times a day to unlock greater efficiencies.

But what excites me most is how AI is helping our store team. Tools like Quick Assist are already being used by over 6,000 store team members every week, helping them to prioritize the most critical actions for their upcoming Fortnight, delivering a better experience for our teams and our customers.

And finally, moving to progress against our sustainability initiatives. Last year, we celebrated a decade of partnership with Old Harvest and we've reached an incredible milestone during the half, providing $100 million to Australians in need over the last 10 years. In December, we achieved 100% renewable electricity across our operations in support of our net 0 goals. We are also on track to achieve our Scope 1 and 2 emissions reduction targets by 2030.

Finally, restoring soft place recycling services to our stores has continued with a market-leading 600-plus stores across the network, now offering this service again for our customers.

I will now hand over to Steve who will cover our financial results in more detail. Thank you.

Thanks, Amanda, and good morning, everyone. I'll start today on Slide 19 with the half 1 '26 results summary for the group. As a reminder, these results are for the 27 weeks ended the fourth of January 2026.

The Group sales for half 1 increased 3.4% to $37.1 billion with all trading segments reporting growth. Group e-commerce sales increased by 14.6% with Australian Food, New Zealand Food, BIG W and Petstock e-commerce sales, all growing in the double digits compared to the prior year. Group EBIT before significant items was $1.7 billion, up 14.4% with the group's EBIT margin increasing by 43 basis points. EBIT margin for all trading segments were up on the prior year.

There are some one-off impacts that impact the comparability versus last year, primarily the impact of industrial action in the prior year, which we estimate had a $240 million impact on sales and approximately a $95 million impact on EBIT in half 1 F '25 in Australian Food and supply chain transition costs. Normalizing for both these impacts, group EBIT growth would have been 7.9%, which includes the benefits from our strong cost and productivity focus in the half.

Group NPAT attributable to equity holders the parent entity before significant items was $859 million, which was up 16.4%. This reflects higher EBIT, a modest increase in net interest costs in the half, somewhat offset by higher income tax. Group basic EPS before significant items was $0.704 per share, also up 16.4%. And Including significant items, NPAT attributable to equity holders of the parent entity declined by 49.4% to $374 million, with EPS also down 49.4%.

Turning to Slide 20 and our group trading performance. In Australian Food, total sales for half 1 were $27.6 billion, an increase of 3.6%. Excluding the impact of the industrial action in the prior year, Australian food sales growth in the half would have been 2.6%. In Woolworths Food Group Retail, which incorporates stores in e-commerce, Sales momentum improved in Q2 with growth of 3.2%, excluding industrial action compared to 2.1% in Q1. This was driven by and improved customer offer and strong execution, particularly over the key Christmas trading period, leading to improved in-store item growth and strong e-commerce growth.

WooliesX sales increased 14.2%, driven by e-commerce growth of 15.3% and 8.6% growth from media words and services. Australian Food EBIT increased by 9.9% in the half. Excluding the estimated impact of industrial action of $95 million in the prior year and incremental supply chain commissioning and dual running costs. Normalized EBIT would have increased by 3.5% in the half. Gross margins rose 8 basis points to 28.6%, primarily reflecting the mix impact of an ongoing decline in tobacco sales. Excluding tobacco, the gross margin declined by 14 basis points on the prior year. with growth in our higher-margin complementary businesses, offset by investments in lower shelf prices, while stock inflation not fully passed on and supply chain transition costs.

CODB as a percentage of sales declined by 24 basis points with productivity initiatives and above-store cost savings helping to offset wage inflation and higher online mix. There was also a rate benefit due to the impact of industrial action in the prior year. While ex DAP and EBIT was up 78.8% in half 1 with e-commerce and media rewards and services delivering improved profit. The increase in e-commerce DAF of 93% reflected solid customer growth, double-digit sales growth, mix benefits from growth in higher-margin propositions, efficiency benefits and cycling both the industrial action and cold chain investments in the prior year.

In Australian B2B, half 1 sales increased 4.9%, driven by strong PFD, PC Plus and export meat sales. increased by 14.6% with double-digit growth from both PSD and PC Plus, the latter benefiting from increased volumes and better utilization of warehouses. New Zealand Food sales for half 1 increased 2.8% in New Zealand dollars, driven by e-commerce growth of 13.9%. Sales in Q2 were more ship due to market growth slowed. EBIT increased by 22.4% benefiting from a combination of higher sales, supply chain efficiencies and productivity and cost-saving issues, partially offset by store wages and D&A growth.

Total W Living sales increased 2.7% in half 1 and EBIT was up 186%. BIG W sales increased 1.8% with BIG W GTV, including BW market, up 5.8%. And BW EBITDA increased by 12%, driven by the higher mix of full price sales and strong cost control. EBIT increased by 122% with depreciation below the prior year following the F-25 impairment.

Petstock sales increased 13.1% and EBIT increased by 49.6% supported by the inclusion of pet food and accessory businesses acquired in half 2 last year and network expansion. Underlying performance was solid with comparable sales growth of 5.8%, e-com sales growth of 24% and double-digit EBIT growth. The other segment includes group functions such as property, group overheads and Woolworths Group's investment in Quantum. The segment recorded a loss before interest and tax of $124 million an increase of 16.3% on the prior year, largely driven by lower gains from property disposals and a rebuild of the short-term incentive provision.

In the half, the group recorded significant ices before tax of $698 million, largely related to a one-off cost associated with the remediation of award covered salary team members following the Federal Court decision on the fifth of September. This includes interest superannuation and payroll tax and is within the previously disclosed range of $450 million to $750 million.

Moving to Slide 21 and our key balance sheet metrics. Average inventory days of 31.2% were in line with the prior year. Australian and New Zealand Food and Australian B2B were down on the prior year, offset by growth in Petstock and high average inventory holdings in BIG W, which pleasingly ended the half below last year. Average payables declined by 2.4 days to 41 days, reflecting lower tobacco purchases in Australian Food, a reduction in BIG W purchases as we reduced stock levels over the half and payment timing impacts.

ROFE, which is a 12-month rolling measure, was 15.2%, up on the prior year and F '25 largely reflecting group EBIT growth in the half. Australian food ROFE declined by 80 basis points, reflecting the decline in half 2 F '25 EBIT last year and a modest increase in funds employed due to the acquisition of the [ Kitchenary ] and our investment in supply chain automation.

Moving to Slide 22 and our capital management framework. The group generated strong operating cash flows in the half, which were invested in sustaining our assets, funding our dividend and investing in growth. and I'll provide some more color on the following pages.

The group generated on Page 23, operating cash flow before interest and tax of $3.2 billion for half 1 F26, an increase of 4.5%. This was driven by solid EBITDA growth before significant items of 8.5%, offset by a modest working capital outflow. The net working capital outflow was largely driven by payables timing in New Zealand Food with an additional payment run prior at the end of the half and reduction in nontrade purchases reflecting our above-store cost saving initiatives. Compared to the prior year, there was also an outflow related to the cash settlement of provisions for redundancies team member remediation.

Net interest increased by 2.7% with nonlease interest up 13.3%, driven by higher average debt, partially offset by lower floating interest rates. Tax paid declined by 35% due to lower F '25 tax paid in the first half of F '26 and lower tax installments in the current year.

Cash used in investing activities of $1.2 billion primarily reflects the group's CapEx spend, which I'll talk to on the next slide. The prior year number was a lot lower as it included $383 million of proceeds from the sale of our final tranche of Endeavour Group shares. Group also paid $92 million for the purchase of equity interest in subsidiaries principally reflecting the acquisition of the remaining interest in my deal to facilitate its restructuring and closure.

Dividends of $553 million declined by 53.5% with the prior year including a $0.40 per share special dividend, reflecting a return of capital to shareholders related to the sale of Endeavour Group shares. Finally, our cash realization ratio was 95%, modestly below our ambition of over 100% due to the working capital outflow and cash tax exceeding the income tax expense in the P&L.

Moving to Slide 24. Operating CapEx for half 1 F26 was $913 million, $88 million lower than the prior year. A reduction in sustaining capital reflected lower spending on store renewals due to initiatives to lower the cost per store in the half. This was partially offset by an increase in new store investment as reflected in the 13 net new stores opened in the half. Investment in digital and e-commerce, which includes our investment in automated CFCs. Gross CapEx increased by $97 million, reflecting higher property development spend, which can be lumpy. For the full year, we still expect operating CapEx to be approximately $2 billion, stable with spend over the last couple of years.

Moving to Slide 25, and covering dividends and funding. The Board today approved a final dividend of $0.45 per share, an increase of 15.4% on the prior year, broadly in line with the increase in earnings. After payment of the interim dividend, our franking credit balance will be approximately $1.2 billion.

Turning to our balance sheet settings. The net debt-to-EBITDA ratio was 2.7x, modestly lower than F25 and are remaining well within our leverage trends. We remain committed to solid investment-grade credit ratings and have significant headroom under our current ratings of BBB from S&P and Baa2 from Moody's. In half 1 F26, the group completed $1.2 billion of debt financing with transactions based on extending debt tenor and reducing refinancing risk for the group.

And with that, I will now hand back to Amanda.

Thanks, Steve. On Slide 27. In summary, as we look ahead, our focus remains on continuing to provide value to our customers, rebuilding customer trust and maintaining sales momentum while making further progress on our strategic priorities. I'd like to thank and recognize our team for their incredible efforts and in particular, for helping us deliver a fantastic festive season for our customers during the half. We are determined to get back to the level of retail excellence and performance our customers and our shareholders expect of us. And I'm confident the steps we're taking will lead to an improved performance. I look forward to sharing further progress on our strategy and our upcoming Investor Day in May.

I will now turn the call over to the operator for questions. To give everyone a chance, can I please ask that you limit yourself to 1 question per person and then rejoin the queue for any follow-up questions. Thank you.

[Operator Instructions] The first question today comes from Shaun Cousins from UBS. .

My question is around price trust. You noted in August that, that was the greatest priority for Woolworths. Just curious around how that's improved during the half. And maybe if you could discuss that with reference to some of the activity you done on pricing, the more of the rolling EDLPs under lower shelf prices and then you've been quite active with more impulse at gondolas and off locations. And then what you've done with ranging. We've noticed you've introduced a sort of a black and white entry level private label offering sort of there as well. So just curious where price trust is at and how you've improved that in the first half, please?

Yes. Thank you. Thanks, Shaun. So certainly, let me just say that we totally understand and are extremely focused on this question of price trust. It's so fundamental to customers choosing Wooworths as a place to shop regularly, and we have put a lot of focus on that rightly so in the half. If I just start by talking about the action that we've taken. First and foremost, if you look at our performance when it relates to the value for money scores. If you look at that this time last year versus where we are now, they're up 8 points and have progressively improved across quarter-to-quarter. And so whilst I would say we still have more work to do there. We've certainly seen a progressive improvement.

And there's things that we've adjusted during that period, as you know, like the introduction of lower shelf prices. Now that program is very much focused on recognizing that customers are looking for good value, that they also want reliable value each and every week that they're shopping. And what we've seen with that program is it's on the big products that really matter to families baskets. And we've seen that customers have really engaged with that lower shelf price program very strongly, and we're pleased to see is a good way of, of course, measuring that engagement, continue to increase, both across our own brand products, but also in the branded products that have participated.

In own brand, for example, in lower shelf prices, it's sitting in that sort of mid- to high single-digit unit growth. But for branded products, it's actually in the lower double-digit numbers. And so strong participation there, and we see that, that has certainly matched an increase in customer perception on value. And then across the half, as you know, we did adjust our promotional programs as well to reflect that what we're seeing from customers is certainly a search for even more value. So an uptick from what we've seen in previous period prior to that.

And so when we look at value in that regard, promotional participation has increased, customers adding more specials to their baskets and participating more in those programs. And one of the big shifts that we made there was, again, it relates to trust making sure that when customers visit our stores, those products are on the shelf. And as you had highlighted to us as many others had, we had an opportunity in that space. And so that's a mix of having the right promotions but also making sure it's available. So I think that's contributed to an improved perception.

And then when we look at everyday rewards, we adjusted the program across the half there, just to give more members more value actually and recognize their loyalty, which has resulted in an even stickier member and some greater uplift that we've seen in member sales across that period. And so I don't think there's any one thing that we've done there. I would say there's a mix of value levers that we've been really focused on that each one of them play an important role. And together, that's created an improved momentum for us, both in terms of sales, but also in terms of items in baskets and transactions through Woolies. Now we've got more work to do. And the more work is particularly in the everyday needs category. And then of course, when we're looking at range. We have made some changes on range, but there's certainly more to come. Thanks, Shaun.

The next question comes from Adrian Lemme from Citi.

Amanda and Steve, congrats on the result. I was interested in the turnaround in the GP momentum within Australian Food. So this half, up 8 basis points year-on-year while last year, we saw it down about 30 basis points. I know you've broken down the factors, but the tobacco benefit was about 20 basis points benefit in both periods, and you also talked to Cartology and services income, but that also helped last year. So I was just interested if you could kind of talk to the actual delta seen stock loss was a positive factor this half, but were there also a better buy in terms of other factors, please?

Yes. Thanks, Adrian. I'll give an overview, and then Steve will add to it. So yes, the 8 basis point improvement in GP, as you rightly say, the cigarettes decline does have that sort of mechanical adjustment that you need to apply as you've called out. We're really pleased when we look at the GP results, the contribution from the complementary businesses. So it's Cartology, Everyday Rewards, really contributing substantially to our performance in Australian Food from a profit perspective. So that certainly assisted in the half.

And yes, it has been a very promotionally intense period and the team from a commercial perspective on balance managed that very well. When we look at how that plays through. There's some pressure in the red meat categories, which no doubt will come to later in the discussions that we've had to absorb there. So that includes the absorption of that. And then from a supply chain perspective, I didn't call it out in the opening comments that supply delivered a really strong result for us in the half. Yes, we had obviously strong volume uplift but aside from that volume uplift the productivity that the supply chain team does is very strong. So that was helpful.

And then on the stock loss numbers, yet again, pretty relatively flat on last year. So we had that increase in H2. And certainly, we've seen an improvement on those exit rates across the half. So that were the sort of big drivers. I'm just going to check with Steve, any other things you'd add to that, Steve?

No, I think they're the main ones. On stock costs actually were largely stable this year on last year in the half, but certainly an improvement on our second half performance of last year. But overall, it is an underlying reduction in GP reflecting the investments that we've made, but the team has worked hard to balance the levers within margin so that it is a bigger impact on earnings as it was at the same time last year.

The next question comes from Tom Kierath from Barrenjoey. .

A pretty strong cost result, which is great to see. I assume that's the cost initiatives that you've announced kind of a year ago, just thinking about whether there's any extension of that and whether as you kind of, I guess, look more closely at the cost base, whether there might be another target or just how you're kind of thinking about the cost base more broadly going forward, please?

Yes. Thanks, Tom. As we called out, as you say, a year ago, we're really determined to build a low-cost culture across lease. And so that was why we came out last year, and we're really clear both internally and externally on the need to reduce our costs. But we want to be a lower-cost retailer. That is what's helped us in the half. certainly deliver better value for customers, but also see an improved result for the business overall. So you should expect to see from us an always-on focus. We haven't called out anything particular in terms of a new program today, but it is our strong focus going forward to continue to look for ways to reduce costs.

What was pleasing in the half was we saw strong productivity as we usually do from our stores and from supply chain, but it was complemented with the improved cost performance out of our support areas, no doubt. And within our cost lines, of course, need to take into account, we've also seen a substantial increase in e-commerce, which just from a mix perspective, does put an extra pressure into the cost lines. But I'll just hand to Steve because he does like to talk about cost a lot. Any other add, Steve?

I think going back to Tom's first point, it was a strong performance on cost in the half. If we look at the group costs grew by 2% across the group. And we've got a business that's growing volume where we've got inflation that we need to cover. We've got mixed headwinds. The ongoing focus on frontline productivity is incredibly important, and we saw that delivered in each one of the businesses. But equally, we talked to the cost-saving initiative to try to take out $400 million of above store and support costs on a 12-month run rate basis.

Actually, the team -- we announced that a year ago, and the team worked very hard on that actually at the back end of last fiscal and really front-loaded a lot of initiatives to the end of 25 in the first quarter of F26. So we delivered roughly half of that 400 in the half across the group. So clearly, a key contribution to being able to cost growth below sales growth, actually, in each one of the trading businesses across the group. So a good result, but it needs to be always on, and that's really where we're shifting our focus.

The next question comes from Michael Simotas from Jefferies. .

I've got a related question to the one on costs and particularly around in-store labor. Our execution has improved. A lot of the feedback in the industry is that you put labor into the stores it's not obvious when we look at the P&L, the labor investment because your branch expense growth was much lower than your admin expense growth, and I would have thought the cost out program was reducing admin expense to fund the in-store. So can you give us a little bit of color around your store labor as well as how those costs are moving through the P&L, please?

Yes. Thanks, Michael. I'll kick off and then I'll hand to Steve. If I just start with store labor as the starting point there. Yes, we did invest more in store labor, but we were also very targeted in terms of where would it make the most difference. And so when we looked at improving availability, for example, there were targeted adjustments that we made in terms of time of day across particular days of the week. And so it wasn't across our entire network.

And then just looking at -- and then we also invested in fresh in particular. And we continue to assess that across both the quarter and, of course, in this year as well as to what is making the most difference in terms of customer experience. Ultimately, that's how we're measuring the performance. And so yes, we did invest that we invested in a way that was quite targeted and then continue to monitor that as we move through.

I'll hand to Steve and then net, if there's anything you want to build on.

I think, Michael, just part of your question on the change in admin expenses. That does include the significant item expense in the half. so that's why you see that cost growing. If you actually strip that back on an underlying basis, admin expenses went backwards, which is consistent with what we would have expected given the focus on that area of our cost base.

The next question comes from David Errington from Bank of America. .

It really is a good morning so I'm really happy to give that greeting. Amanda, what really pleases me with this result is it's been a fantastic result with cost savings, you've really driven productivity, which is fantastic. But what really stands out for me is that you've nailed the execution. Slide 6 and Slide 5 of the slides are pleased if we could refer to Slide 6 is just phenomenally positive. And it seems to me, and where my question is, I remember talking to you at the end of August. And one thing that concerned me is that you were very slow to respond to changes in the marketplace.

You were very slow, whether it be picking up trends or you're on -- you picked up the trends, but you're too slow to execute. You seem to have been able to turn that around, whether the data is better. Look, I was really encouraged to see that you seem to be on top of what the customers really want. So whether your data input is better. but you seem to be responding better and quicker into the stores, can you spell out what you've done there? Is it the supply chain benefits that you've done that's coming through? Because it's just a wonderful achievement to get such an improvement in the voice of the customer when you've driven productivity and following Michael's point, when you've driven labor harder when you've driven your costs and your efficiencies yet to still get such a great pickup in your voice of customer, it's just a great result.

Can you go into how you've been able to achieve that? Because last August, I was a bit concern because you were talking about how you were too slow to respond. So it just seems to have phenomenal turnaround. Can you go into those details, please? That would be really appreciated.

Yes. Thank you. And thanks, David. As you know, we're always focused on what we can do better as well. But if we just go back to that period. I'd start by saying that we made very significant people and leadership changes at multiple levels across Australian Food during that period and just prior to that trading period. And so the level of disruption, which was a combination of the work that we were doing to reduce our costs, but also our focus on how do we consolidate and simplify the structures within the group and then appoint the right leaders into those critical roles, whether that's the leadership roles across Australian Food, where we have a net leading Woolworths retail and leading e-commerce or the commercial roles that sit across each one of our key categories and areas.

At multiple levels, we made changes and there's no doubt that there was a high level of disruption and distraction. And I in no way want to make any excuses for that. But I do think that, that was the biggest determining factor around our performance during that period. And so what I've been very pleased to see is how the team now wants they enroll, focused and they're focused on delivering across multiple horizons. And so yes, we put a lot of focus, as you say, on addressing what is it that customers are needing and wanting from us right now, how do we improve transaction growth and item growth items in particular. And so there's very much that focus on trading the business today.

But also on building the future and getting clearer around how we want to evolve the proposition of our supermarkets and our retail propositions in e-commerce going forward, whilst also being really clear with the team that we do need to be a lower-cost [indiscernible] and that we should be proud about that, and we should be focused on it because it enables us to deliver better value to customers and build a better business together. And so it was a disruptive period. We've got a highly focused team around. We're very pleased to see improving momentum. We still think there's more for us to do in terms of work across our categories and our offers. But we're focused on building now on the momentum that we have.

You're doing very well. So well done, as I said, that you seem to be using data a lot better than what you were. So really pleasing to see them with AI coming in. Yes, it's promising.

The next question comes from Bryan Raymond from JPMorgan. .

One just to follow on actually from David's question just around -- and you mentioned Amanda, some personnel changes there. I just want to focus in on Australian Food and the appointed Peter McNamara to lead the long-life part of the business from a bond perspective, at the start of the financial year. That preceded from what we've heard from the supply base, a strategic pivot towards impulse categories in store, particularly on promotion in gondola ends, et cetera, at the start of the second quarter? I just interested as to how much that's impacted your sales results that you're seeing better uplift maybe in some of those impulse areas where you've been a bit underweight in the past from a store positioning perspective? And now that's really come back to the floor from what we've heard. I just be interested as to how much that's important and whether that's got a bit further to run going forward?

Yes. Thanks, Bryan. Look, what I would say is that we focus on what is it that will make a customers. And how is it that we drive item growth. We knew that we had customers still shopping in our stores. And so I just want to come back and say this yes, we've seen a substantial improvement in our grocery performance and across, as you say, some of those impulse categories. That's, I would say, primarily driven by a more disciplined execution. We've also seen strong fresh growth, which we're very pleased to see because it's a key part of our strategy overall.

And then we have a team that's very focused on one customer plan. And so we talked about a lot of the structural changes that we've made and leadership changes. That's also been about bringing together a much more disciplined approach to the way that we go to market with our one customer plan across commercial customer loyalty operations and into the supply chain. And so we're just seeing now the start of the team getting into the right rhythm, which really matters in retail, as you know. We have run sharper promotions, no doubt. I'm just looking at a net, and I know you've been deeply involved in activating a lot of these. Do you want to add some color there?

Yes. Thanks, Amanda. I think that's right. We've done a lot really focusing back on listening to the customer, listening to our store teams and really building that momentum through great offers lower shelf prices and a very strong focus on planning right from planning right through to execution. What that's helped really shape is some of the things we just talked about, which is good availability in stores, particularly on some of the categories that you just mentioned in categories like impulse through promotional activities, where customers may not have thought they were going in to buy something that saw something on the shelf that they interested in, but it was broader than impulse.

I mean we have seen great growth in our drinks categories. The team has been doing a fantastic job, particularly through some of the hot weather that we've had through the half. but also through pantry essentials, through our meat business. So it really has been a really strong focus on retail discipline end-to-end that has really driven those opportunities. I would say, and you may have called it and still a lot more to do. And so we're seeing some slightly better results in some of our everyday needs categories. But that is, of course, another area of focus. And so I would say we have a lot of work to do to make sure we're getting consistent delivery across the business and more to see in the next half.

The next question comes from [ Nicole Penny ] from Room Equity Research.

In light of the previous comments regarding the cost of doing business reductions in the Australian Food business, -- could you perhaps comment on the time frame over which any potential benefits of consolidating the New South Wales operations at Moorebank will provide further benefits, please? And just another one, Australian B2B showed some encouraging operating leverage there. How much capacity has this business got to continue to grow earnings ahead of revenue, please?

Great. Thanks, Nicole. Yes, we've been very focused on the work to transform our New South Wales supply chain. And I'll just hand to Steve to talk through the implications of that as that flows through.

Yes. Thanks, Nicole. So we have really been spending most of the last 12 months ramping up NDC. And so we're now doing around 2 million cartons a week. We're not fully transitioned all the volume in there, but actually, we're noting to see results in line with what we'd expect out of the national distribution center. We are very much still in ramp-up mode in the RDC. So nice to be able to take many of you through that facility pre-Christmas. I think we are at 60-odd stores pre-Christmas, I think we have about 120 stores now last couple of weeks we've been doing about 1 million cartons bearing in mind, we anticipate at maturity getting that to 2.5 million to 2.8 million cartons. So there's still a high bit of ramp-up to go.

So I think when we've talked about this in the past, we still do expect commissioning and dual running costs to continue from through F26 at similar levels to F25 and equally into F27 as we start to go live with the Sydney Children Fresh RDC, which will go live in actually F28. And so -- we do, though, expect some of those commissioning and running costs start to be offset by the benefits. They will progressively ramp up over the next couple of years and really be at maturity. I think we talked about this in December when we had many of you at Moorebank around '28, '29 when they start to reach maturity. So we are -- but we are encouraged by what we're seeing, but we do recognize that are going to take some time to flow through the P&L.

And then on B2B, I'm happy to take that question actually because within there, the 2 main businesses, up TFT and PC Plus. Actually, both had strong results in the half. It is just worth being clear that the PSD results does include an extra week in the current year that's not even comparative as we've just lined PFD's reporting periods up with the rest of group, but we have disclosed in the notes the adjustment that, that would have made to earnings in the half, if you just normalize it. And in fact, both delivered strong double-digit earnings growth in the half. we would consider there being a lot more runway in both those businesses to continue to grow earnings above sales through the medium term.

The next question comes from Craig Woolford from MST Marquee.

Amanda, great to see the momentum improving across the group. Can I just ask a question about that sales momentum, particularly on the food segment. I guess there's 2 parts to it. One is, is there any in you can give on what the strike impacts may have been in the first 7 weeks from a year ago? Is that still having an effect on reported results. But more fundamentally, I'm interested in what you see going forward on price and volume. The price inflation is dropping away a little bit, with good use for consumers, but might make it harder to maintain sales momentum?

Yes. Yes. Yes. Thanks, Craig. Just when we look at those weeks is important to know, as you point out, that we were recovering from the industrial action last year. And when we certainly look at the 7 weeks, we didn't last year call out a specific number. And we didn't do that for 2 reasons. One is supply chain was back up and running, and we were in flow in terms of delivering to our stores and to customers. And then we also didn't want to create, to be frank, just excuses for ourselves. We're very focused on just building the momentum as we move forward. So we don't have a number to specifically call out, but it is important to note that, that is a fact.

And particularly, if we look at to give you a sense, Victoria. Victoria for us, was and continue to be very softer and lag the rest of the states across really the last 12 months. And certainly, as we've come into now the first 7 weeks, you can see that Victoria is performing particularly strongly. So there's no doubt there's some cycling benefit there.

When it comes to your second part of the question around just this price and volumes, we've been and we've been really clear that for us, it's about driving unit volume, and that's what we're focused on doing. You'll see from the average selling prices that we've shared that, yes, there has been a moderation in that. But I'll just hand to Annette to talk a little bit more because there's some color as we just look at the different categories that might be just worth talking through.

Yes. Thanks. Just from a general perspective, yes, the number of price increases coming through from suppliers have slowed since the peak in July and August. There's still a course coming through, but they have a different shape and a different ask and it is category specific. So yes, we're still seeing some come through in some of the food categories. But as you alluded to earlier, Amanda, that some significant shifts in the livestock, particularly in red meat. And of course, weather impacted in fruit and veg, so it's a little bit difficult to kind of pinpoint but we are still seeing some inflation in certain categories within food and veg, like capsids and strawberries that are all very weather-dependent. So yes, it's slow, definitely slowed from Q1 into Q2. And so I think it will be a strong watch out for us as we get into this half.

The next question comes from Ben Gilbert from Jarden. .

Just to sort of dig into the then a little bit more on how you think about the rest of the year, notwithstanding sort of the guidance. But it feels like you've just traded the business a lot harder and you're a lot more of locations and impulse, et cetera, which is great. Seems like it's really resonating. I suppose 2 puts the question one is how profitable is that growth? If you have to dip into your own pockets. Your run rate obviously would suggest you can print an EBIT number higher than what you sort of tightened that range up to? And then the second part is, I'm just interested in how you're going to capitalize to try and drive a broader halo of that across the rest of the business, and particularly into those everyday needs categories and seen the anecdotal comment you made that you are seeing some improvement in that as well?

Yes. Thank you. I think we've demonstrated in the half that through a really strong commercial discipline that we've been able to deliver a solid GP result in the half. And certainly, as we move forward, we would see it being broadly consistent as we move into the second half now, in terms of that question, I just want to come back and say it hasn't -- this result has been driven by a series of factors. Yes, we've been more competitive than we said we would be. But it's also being driven by improved availability genuinely better experiences in our stores and our customers are telling us that with the ratings and the feedback that they're providing to us. And so certainly, we've been more competitive.

But this result is not primarily driven just by that. And we see it as being something that is sustainable on the go forward. And that's because it's a balance of levers that we've been using. Our lower shelf price program is absolutely delivering value back to customers in a way that is good for customers, consistency, reliability, but also good for us in terms of our supply chain and the efficiencies and the way in which we manage that the promotional program. We have been more competitive and have certainly had more market-leading offers over the last 6 months, but we've managed that within the right commercial frameworks through both ourselves and our suppliers working with us.

And then when we think about the role Everyday Rewards plays, we just broadened that out to have a lot more above the line or visible opportunities for customers to earn value, and that's something that is sticky. And that's not about a short-term sales or sugar in that's about building long-term growth with our customers and rewarding their loyalty. And we've really been very thoughtful about how it is that we manage all of that so that we can deliver more value for customers -- we can manage our responsibilities around profitability of the business and the sustainability of it going forward.

When we look at your question around everyday needs, again, fresh was very strong for us. grocery was strong and everyday needs, we saw a gradual improvement. And I'll strained to talk more about this, but particularly in those key categories of baby and Pet, where we needed to see improvements. We took a series of actions there. We've still got more work to do in the personal care category, I would say, the 1 that we haven't seen as much traction.

But Annette, do you want to just add a little bit of color of what we see on everything me and what some of the actions that we've taken there.

Yes, I think you've called out the key categories, Amanda, in hit. Again, it's very much looking at multiple horizons. So in the near term, just holding that competitiveness in an incredibly and growingly competitive market unit price is very important, bulk packs are very important. So you saw some changes in the way that we approached some of those items within the pet category. We also introduced a new range in pet food in the adult category, 95 new products came in to the range with a real focus on the balance between branded products. Again, the bulk items where we thought it was required, and of course, some really good own brand products leveraging the relationship and the partnership we have with Petstock.

So Billy's [indiscernible] some great things came in, in the pet category. So you'll start to see some shifts as that rolls through. It's actually rolling through right now. So pets starting to see some -- the minor. We've got a lot of work to do in the category, but we're starting to see some very small ships. In baby, again, multiple horizons, working short term on making sure we've got the right value offers for our customers. We've done some work to reset quality of our own brand, Little Ones products, they will start to come through the wipes have come through now, but the nappies will start to come through over the course of the next couple of months. And earlier in the half, we introduced Milli Moon, which was a fabulous own brand product that now has a high single-digit share of that category. So again, you're seeing shifts within the baby category.

Beauty, again, very different to the previous 2. It's all about being on trend. We launched some very good products during the half. Billy got a lot of attention -- the video that launched Buy had 20 million views, which is extraordinary and just shows the nature of how customers are interacting with innovation and every new categories, 50% of the customers that came in by we use the category. So we're seeing new customers come in, and there were a lot of new brands that launched through that beauty category in the half. So we're seeing very different in these 3 categories and everyday needs, different plans, but on multiple horizons.

I mean, if you don't mind, I would also say just back to the start of the question, we're also seeing a lot of growth in the way our customers are eating and what they're serving at home. So at home consumption has been a very strong trend that we've seen continue to grow. So yes, impulse has been very important for the quarter, but so has some of the biggest moves in things like coffee. And so we've seen growth in coffee from, in particular, Cafe brands like Can Person and Grinders coming into that category, and we're seeing some really strong very positive double-digit growth. So yes, it's in some of those impulse categories, but it's actually right across, whether it's protein yogurts, it's actually -- it's going -- it's more broad than just the in cost category for sure.

Yes, great. And then just to come back to the top of your question, when we look at the guidance that we've provided and that move to an upper single profit growth, important just to look at that in the context of everything that we've shared today in terms of customers are looking for more value, it is a very, very competitive market. And so we're very mindful as we look forward that we expect customers to continue to seek value competition to continue to increase. And so we've provided the update that we have with that context as well.

The next question comes from Caleb Wheatley from Macquarie.

And Steve, and congratulations on the results. I just wanted to come back to this price trust discussion, particularly in some of the prior comments you've made on sort of price perception issues rather than actual pricing problem. Are you able to just talk through sort of the quantum of reinvestment that's gone into price to manage that price perception issue? And then sort of looking forward, how much more work, if any, do you think sort of needs to go into focusing or resolving that prior to set issue, please?

Yes. Thanks. And price trust, price perception has been important as we talk about one of the ways in which we measure that is to look at proximal and the value for money scores that we are receiving. And importantly, we know that customers look at that at an individual item level and are making decisions around where they shop at an item level, but also at a total basket level. And so that's also informed our decisions around how do we make sure that customers are realizing the maximum value. Again, we've used multiple levers across our promotions, our lower shelf price and everyday rewards to make sure that we create the right value for customers we know they're looking for it.

But price trust is something that builds over time. And so we certainly know that we've still got work to do to improve trust in Woolworths and trust in our prices, and that will remain a focus for the next 12 months ahead. Importantly for us, this is why we committed to the lower shelf price program because that's about reliability. Customers want to be able to count on us. And so that's been an important element of the offer that we have in place. alongside reaching customers across probably a broader mix of media than we have in the prior 12 months as well.

So we have adjusted the way in which we talk to our customers and reach them as well across the period, which is important when everyone is looking for value. So I would just -- there's no number that I would particularly call out. We're always investing in price, not just in shelf prices, but in specials as well. We'll continue to do that, and we expect to continue the need to focus on building price trust over the next 12 to 18 months.

The next question comes from Richard Barwick from CLSA.

Amanda, I wanted to talk about BIG W. That was a strong -- much stronger result than I think many were expecting. And you've talked about -- it's on track to be EBIT and cash flow positive. Not surprisingly, you're talking about the profitability being weighted to the first half. I think everyone would expect that. What does that mean, though, in terms of profitability for the second half? Are you flagging that you can actually turn a profit from BIG W in the second half? Or should we be expecting another loss?

Yes. Thanks, Richard. Look, we're not giving out specific numbers on the profit number for BIG W, but we were wanting to reinforce and just help everyone understand is it is heavily weighted due to Christmas and seasonal sales in that first half. but that we are remaining committed to the commitment we gave in August around being EBIT and cash flow positive. Dan, is there anything you wanted to add in that context, we're not going to be talking about the specific numbers in terms of profit, but any other context?

The only other context I would give is that the health of our sales have been much stronger in the first half, especially in categories like clothing and home where we flow seasonal stock a lot better. We got in and out of inventory a lot better and those processes are maturing. And so we do expect half 2 and half 2, the improvement of the health of sales and the improvement in the shape to continue in absence of a specific EBIT number, we do expect improvements year-on-year.

So proven second half and second half, that's helpful.

Yes. we're comfortable with that.

The next question comes from Phil Kimber from E&P Capital.

Amanda, just a question on -- there was a specific comment you made in the actual announcement that said heightened competitive intensity in food e-commerce. I was just wondering if you could provide a bit more color around that. Is that being led by yourselves being more aggressive? Or is something else going on there?

Yes. Thanks, Phil. Yes, that was really a reference to the fact that as we know Coles launched the Ocado partnership some time ago and have been very focused in the market in e-commerce, driving a lot of activity in that space. And then as we look at the on-demand space, in particular, with different platforms, whether that's Uber or DoorDash or our own. And customers are now really focused on that on-demand to our opportunity. Certainly, we're seeing competition increase, in particular around customer acquisition.

So just looking at Amitabh, can you just build in terms of some of the intense competition we are seeing between in Sydney and Melbourne?

Both to add to what you said, Amanda, one is from traditional competitors, where with goals with our stepped up performance and their focus with their card of boxes is actually definitely sped up in terms of competitive intensity. But I think what's more interesting in the more recent times is the growth with what I would say are formidable global retailers, whether it is Costco already with strong presence in Australia and for the first time, offering their products online, or whether it is with Amazon having entered the fray as well. So that is what we're clearly seeing, a lot more competitive action in the e-commerce space and we are obviously quite determined to stay competitive and to make sure that we deliver, we are the first choice for our customers.

The next question comes from Peter Marks from Goldman Sachs.

My question is just on Australian Food business, interested in hearing about the launch of the customer offset sorry, offer reset program that you've launched. And I guess the details around that, what's involved? Is it a range review program? And I guess what you're looking to achieve with that and the timing of any benefit we should expect?

Yes. Thank you. Thanks, Peter. So the customer offer reset is something we're running across the group. So that includes Australian Food our New Zealand food business and BIG W and particularly relates to the relationship that we have with our major suppliers that connect with us across those 3 businesses and across the 2 countries. We really wanted to first foremost simplify the connection with Woolworths, and that's important for us and important for our supply partners and also engage in the right strategic conversations around how we reset those categories for the future so that we grow together.

And so it is a new way of us engaging with our supply partners, but it is very much an hence the name customer offer reset. It is very focused on what is it that customers are looking for across individual categories. and how do we work with those larger suppliers across our 3 businesses to unlock the full potential of those categories with customers in mind. And so it's a program that will progressively roll out across the next 12 and 18 months. We've started with a series of 4 key categories that are underway now. And as we've shared with our supply partners, we want to partner together with them on this. And so we will take the learnings from the first 4 categories as we then roll that out across the rest of our categories. And so it does align broadly with range reviews so that we can on the appropriate time, but it's a new way of us working.

So the new way is, I guess, you're buying across the 3 different businesses now. Is that the right way to think about it?

I would say that we're looking collectively together with our supply partners on the opportunities that exist in each one of the categories. Each one of those businesses has a slightly different customer base, slightly different need, but we're bringing together a shared conversation with our supply partners as to how we do business and how that plays out in each one of those businesses and categories will look and feel a little bit different. And we'll learn more across this year.

The next question is a follow-up from Michael Simotas from Jefferies.

One on e-commerce profitability. Your margin effectively were close to double year-on-year. And I know the first half of last year was pretty tough for the business. But the way we calculate it, it's about 3.5%, which looks like a very good outcome given that competitive dynamic and customer acquisition costs that you talked to. Can that business continue to scale and deliver leverage from here? Or do the costs become more variable?

Yes. It was a strong performance from the e-commerce business in the in the half. And importantly, as we know, our e-commerce business is primarily fulfilled from stores. And so it's a really important part of our offer overall. The short answer is, yes, we do think we can continue to improve the profitability and performance of e-commerce. And there are a number of things that drove that in the half. And I'll just hand to Amitabh to add a little bit more in terms of the key drivers of that e-commerce results.

Thank you, Amanda. So the 3 things that we think have really made a difference in our profitability performance in the half. First is the proposition mix itself, where we've consistently invested in our direct to put capacity that has driven growth in our collections. Collections have grown at more than 20% compared to the rest of the business having grown at 15% in e-commerce. And the second is continued growth on demand, which is also margin accretive as a proposition for us. So both the propositions which are margin accretive have grown faster based on the investments that we've made both over the years as well as more recently.

Second driver is the fractionalization of the fixed cost itself, which we have reached a scale in the business where with continued growth in the business, we continue to fractionalize our fixed costs, and we expect to see that benefit coming through. And finally, operational discipline in terms of just the productivity pipeline that we've had driving both our picking costs and Amanda referenced in different conversation some of the AI tools that are in place or to drive better picking -- to optimize our picking as well as in the last mile delivery cost. So all 3 have driven, and we expect all 3 to be sustained going forward as well.

Just one build, Michael, I think, in that growth in the half, there are some cycling benefits both the industrial action, but we did make a material investment in cold chain integrity last year, which we've now structurally found ways to reduce that cost and retain that integrity. So the profit growth moving forward, I wouldn't necessarily be in that type of expansion each half.

The next question is a follow-up from Adrian Lemme from Citi. Adrian, your line is open.

Yes. Sorry, sorry for that. I had a question actually on New Zealand. I understand the implemented changes in the store operating model partway through the half that you can reduce the number of managers. Just wanted to know, is this a key driver of the lower CBB margin. But then I guess, more importantly, can you talk about how the new model compares to Australia? And if it's not already on that kind of model could Australia sort of follow down the line, please.

Yes. Thanks, Adrian. So we did implement in quarter 2. We've been testing this in New Zealand for quite some time, a new operating model. which moved from really having that department focus to more of a functional focus in terms of the way that the operating model itself works. And during the period, it was really about implementing quite a substantial change and if anything, to be perfectly frank, it probably impacted a little bit of our performance in quarter 2. Just as we made such a large scale change across the entire New Zealand business. We think it's a great model, certainly for future, but we want to see that continue to improve performance across New Zealand first.

So when you're looking at the implications of that from a cost perspective, certainly, we hadn't yet seen any substantial benefit from that flow through in the first half. And right now, as we ramp up that operating model, we've also got more focus. And so it will take some time for the benefits of that to materialize. I'll hand to sell in a moment to say if there's anything else you wanted to add to that.

On your question of Australia, look, right now, what we're focused on is let's see how this in New Zealand for us. As I say, we've been testing it for some time anyway. But when you release things out at scale, you always learn more -- and so we'll be focused on learning from our New Zealand business first and then determining whether or not that's the right model for us in Australia.

Sally, any other reflections in terms of operating model?

Thank you, Amanda. Yes, absolutely. I think the model is predicated on us being able to deliver a better customer experience and actually building stronger momentum in retailing careers for the team. It was a very significant change in the New Zealand context. So 2,000 new team members, of our frontline workforce who are new to our business, and so supporting them onboard and be part of our team has been a very big focus. And we actually have 300 team members are new leadership roles for the very first time. And that's about helping really build a strong pipeline for us all the way through to store managers and beyond. So we are in the throes of embedding this model and focused on how do we get back to basics, make sure we've got the fundamentals of our routines right and that we're in a stronger position going forward.

The next question comes from Craig Woolford from MST Marquee.

This might be for Steve. Just is that for in the full year results, just about the outlook for FY '26, there was specific items called out around the tobacco headwind. It was supposed to be $80 million to $100 million across the year, the workforce system, $60 million and then the lower shelf price of $100 million. Can you just clarify how those factors impacted the first half results?

Yes. So from a tobacco perspective we called out $80 million to $100 million estimate. We think that's still the right estimate for the full year, but it's slightly weighted to the first half. So there's a disproportionate component in the first half. In terms of the technology investment as multiple systems that were invoice systems that we're replacing not just the time and attendance. We called out a $60 million estimate roughly 50-50 across the 2 halves.

And LSP, we haven't specifically called out the number, but we said it would be a minimum investment of $100 million in our own brands. But obviously, we been able to get a scale that program and to get a lot more suppliers on board. So -- but broadly, if you think about we launched it in May last year, you expect roughly, it would be 50-50, maybe slightly less given the cycling impact in the second half.

The next question is a follow-up from Bryan Raymond from JPMorgan.

Earlier, I think, Amanda, you might have mentioned some strategic optionality with BIG W. I'd just like to elaborate on that a little bit, if we can. Profitability has improved would a potential exit the sale of this business beyond possible or one that you'd consider? Or did you mean something else by that strategic optionality comment?

Yes. Thanks, Bryan. Firstly, I just want to acknowledge that it is very good to see an improved performance from BIG W and the transformation plan that the team has put in place. that they've been very focused on delivering is showing some good improved performance. And so we're very pleased to this the BIG W team to see that. When we're talking about BIG W, we want to make sure that, that business and that team is super focused on their transformation. They've done a great job, and there's more to do there.

We talk about the IT separation primarily because giving BIG W the independence to be able to build the right platforms that fit for purpose is really important for a discount department store. BIG W has been deeply integrated across the Woolworths technology systems and as a result, has drawn on a lot of the food technology. We want to make sure that as the business works forward, particularly when we look at areas like e-commerce, which is driving a lot of positive growth for BIG W that they've got the right tools and the right technologies to be able to drive that forward. So there's nothing that we would further update with regards to BIG W other than what we've already shared. Thank you.

Thank you. That does conclude the question-and-answer session for today as well as today's call. Thank you for participating. You may now disconnect.

Good morning, everyone. I'm Scott Perkins, Chair of Woolworths Group. I welcome you to the 2025 Annual General Meeting of Woolworths Group and look forward to engaging with you during the course of today's AGM. I'd like to welcome Trevor Eastwood from Dalmarri to our AGM, and thank him for joining us today. I'd now like to hand over to Trevor Eastwood.

[Foreign Language] It's hello and good to see your friends in my language, the direct language. I'm -- my name is Trevor Eastward. I'm the proud son of Uncle Danny Eastwood, a local elder on this land. He's in the elders -- direct elders group, and he does give me permission to do a welcome to country.

Now we're all Australian. We all walk this beautiful country as one. I welcome to the country. It's a bit like a healing statement. It's to pay respect to the past, the present and where we are today. It's a way of moving forward.

The land we're on today is of the Darug people, one of the 29 clans of the Aurora nation. Now the Darug Land goes all the way up to [ Lidcombe ] into Petersham, down to Liverpool and parts of the Hawkesbury. We're bounded by the 4 mighty Rivers, the Nepean, the Parramatta, the Hawkesbury and the Georges River. We traveled up and down these waterways for thousands of years. So I welcome to the country. It's just acknowledging the land that we've walked on for thousands of years.

So when I pay my respects to the country that we're all on today, I pay my respects all the way to the tops of the tree tops, deep down into the deep roots of the ground into all the life-giving waterways, but most importantly, I pay my respects under the stars, which all our ancestors watch over us as we walk this great southern land as one. So big [Foreign Language] and on behalf of the Elders Group, welcome, welcome, welcome. I pay my respects to all the elders, past and present. But most importantly, I pay my respects to you guys for walking this journey together. And in particular, the Woolworths Group because we see -- First Nation people, we see firsthand of the impact that Woolworths has across Australia through employment and sustainability. So [Foreign Language] is like a big thank you from the heart on behalf of the Elders Group. So once again, welcome, welcome, welcome. Thank you.

Thank you, Trevor. We are very pleased to be a meeting here, and thank you for joining us today. I also acknowledge the traditional owners of the Darug Country and pay my respects to elders past and present and any Aboriginal or Torres Strait Islander people here with us today or online. It is a privelege to be with you all. Thank you for joining us. Turning to today's AGM. We are pleased to offer Woolworths Group shareholders the option of participating in today's meeting in person and online. Our group company secretary has informed me that a quorum is present, so I declare our 2025 AGM open.

For those in the room, I'd first like to outline the emergency procedures for this venue. Please take a moment to identify the emergency exits closest to you. In the event of an emergency, 1 of 2 alarms may sound. The alert arm is a series of warning beeps. If this alarm sounds, please stand by for further instructions from the wardens. If the evacuation alarm sounds, a whooping alarm, all occupants will be directed by the wardens to leave via the nearest emergency exit quickly and calmly and to make their way to the assembly area, which is located through reception leading to our on-grade parking. Once there, please remain at this location until Woolworths Group team members advise you it's safe to return to the venue. If we are required to evacuate, please leave your voting handsets and smart card on your chair.

I would like to introduce my colleagues on the stage here today. Starting on my right, our Managing Director and CEO, Amanda Bardwell; Jennifer Carr-Smith, Non-Executive Director. Jennifer is standing for reelection at this meeting and will address the meeting later today; Ken Meyer, who is standing for election at this meeting and will also address the meeting later today; Holly Kramer, Non-Executive Director and Chair of our Sustainability Committee; and Warwick Bray, Non-Executive Director, Chair of our Audit and Finance Committee.

Starting on my left is Dom Millgate Dom Millgate, our Group Company Secretary; Kathy Tesher, Non-Executive Director. Kathy is standing for reelection at this meeting and will address the meeting later today; Maxine Brenner, Non-Executive Director and Chair of our People Committee; Philip Chronican, Non-Executive Director and Chair of our Risk Committee; and Tracey Fellows, Non-Executive Director.

Also in attendance today is Tom Imbesi, the company's lead audit partner from Deloitte and members of the Woolworths Group executive team.

I will now talk through the procedural matters for this meeting. Instructions to help you navigate the online platform are available in the Notice of Meeting and in the online portal guide, both of which are available on our website. The notice of meeting sets out the business of the meeting and explanatory information for each resolution, and I propose that it be taken as read. If you have trouble using the online platform, please contact Lumi on the phone number shown on the screen of your webcast. If we experience a significant technical issue or we are required to evacuate this building, I will suspend the meeting until we are able to recommence or if we are unable to recommence within a reasonable time, I will adjourn the meeting to another day and time. We will provide shareholders with details of any adjournment via the ASX and our website. Those of you participating online today will see a split screen with the instructions on the left and the broadcast and presentation slides on the right. You can maximize the broadcast window by clicking on the full screen icon on the top right-hand side of the window.

A vote at today's meeting. In order to do that, you need to be registered as a shareholder, which includes body corporate representatives and attorneys or a proxy. We will vote on each resolution by way of a poll, which will remain open until the conclusion of the final item of business. The final votes for and against each resolution will be released to the ASX after the meeting has closed. For those participating online, you can vote by clicking on the voting tab at the top of the screen, which will open a list of all resolutions and the voting options. You can vote for, against or abstain by selecting the option for each resolution once the poll is opened. If you have multiple holdings, you'll need to log in separately with each individual holding to lodge your votes.

For those in the room eligible to vote, votes will be submitted using electronic voting handsets. I'm sure everybody in the room is well accustomed to using the handsets. However, if you have any issues or you're voting and you do not yet have a handset, please raise your hand now and one of the Lumi or registry assistants will help you.

If you have not already done so, please insert the smart card into the top of the handset with the barcode at the bottom and facing towards you. Your name should now be displayed across the top of the screen of your handset. To vote using your handset, select 1 to vote for, 2 to vote against or 3 if you wish to abstain from voting on any resolution. Confirmation that your vote has been received will appear on your handset screen. Your vote is automatically counted. You can change your vote at any time while the poll is open. If you wish to cancel your vote and have no selection recorded, press the X button.

Only shareholders or proxy holders may ask a question or make a comment during today's meeting. I ask that all comments and questions are directed to me. I may also direct questions of a more detailed nature to the CEO, Amanda Bardwell, or the CFO, Stephen Harrison. There are 2 ways to ask questions in the room by using a microphone in the auditorium or online by submitting written and audio questions via the online platform. For those attending in person, please see the attendant at the microphone nearest to you.

We have 2 fixed microphone stands in the middle of the auditorium for ease of access. If you are asking your question as a representative of an organization or group of shareholders, please include that information in your question. To allow us to work through the questions and give shareholders an opportunity to voice the largest range of questions, I've asked the moderator to take the following steps for the smooth functioning of the meeting. Firstly, shareholders who have not already asked a question on the relevant item will be prioritized. Secondly, if we receive multiple questions via the online portal that are largely identical, one of these questions will be read and the related questions answered together.

In order to allow a reasonable opportunity for all shareholders to speak, I will limit shareholders to no more than 2 questions or comments at a time. If you have more than one question or comment, please ask them together upfront, and I will respond to you both. If you have additional questions, there will be an opportunity for you to ask them once other shareholders have had a chance to speak. I'd like to stress that it's not in the best interest of this meeting nor respectful of all the shareholders attending for questions to be repeated nor for individual shareholders to dominate proceedings with large numbers of questions. I would like to give all those shareholders wishing to ask a question the opportunity to do so, and therefore, won't permit repeated questioning on essentially the same matter.

Finally, we will conduct the meeting in a responsible manner, and ask that shareholders are respectful when asking questions as we will be when answering them. To submit a written question via the online portal, click the Messaging tab at the top of the screen, type out your written question and select the Send icon. To submit an audio question via the online portal, select the Home tab and follow the asking audio questions instructions. Enter the requested details and click Submit Request to join the audio questions queue. Shareholders will be able to listen to the meeting while wanting and waiting to ask their question. If you do have questions, I encourage you to submit them as soon as possible. A member of our communications team here at Woolworths will read aloud questions to the meeting. I will deal with questions in accordance with the item of business they refer to.

Every year, we receive a number of questions about individual customer service, product or store-related matters. For those in the room, you can speak with one of our customer service team members in the foyer area after the meeting finishes. For those of you online, if you submit a question without an individual -- about an individual customer or administrative share registry matter, I've asked the team to inform you that the best way to get resolution of your matter is through our customer service channels or through the share registry. Those contact details can be found in the Notice of Meeting and also on the Woolworths Group website.

Now ladies and gentlemen, and fellow shareholders on to my address as Chair of Woolworths Group. Today, you will hear both from me and our CEO, Amanda Bardwell. As we share our reflections on the past year, we will explain the factors that have impacted our performance and the actions that have been taken to restore performance and how these are tracking. I will also cover the key areas of focus for the Board including team safety, Board renewal, progress against our sustainability agenda including the conclusion of our 2025 plan and the plans for our next horizon. I look forward to the opportunity to meet many of you and address questions from shareholders during the course of the meeting.

The group's performance in FY '25 reflects a series of challenges which resulted in financial outcomes that fell well short of our expectations primarily due to lower EBIT contributions from the Australian Food and BIG W businesses. Group EBIT before significant items declined by a normalized 12.6% impacted by a combination of ongoing cost-of-living pressures from customers, the necessary action taken by the business to lower shelf prices, and the material supply chain disruption from extended industrial action in the first half of the year. Excluding the impact of industrial action, incremental supply chain commissioning and dual running costs and the acquisition of Petstock in the prior year, group EBIT would have declined by a normalized 7.8%.

While BIG W sales momentum improved over the course of the year, it reported a loss for FY '25 reflecting gross margin pressure due to clearance activity in Clothing and lower prices as the business continued the reset of its range. Somewhat offsetting this was an improved earnings performance from our New Zealand food business, reflecting good progress on its ongoing transformation and a strong year from our e-commerce business and food service business, PFD. The Board declared a final dividend of $0.45 cents per share, bringing the total full year dividend to $0.84 cents per share, with the reduction on the prior year in line with the decline in earnings per share and also reflecting the $0.40 cents per share special dividend declared in FY '24.

Reflecting the group's performance and shareholder outcomes, management’s long-term incentive did not pay out in FY '25 and the group's short-term incentive achieved a partial vesting driven by important safety, customer and sales outcomes. A one-off accelerator incentive was introduced in January 2025 for 150 senior leaders to ensure focus on driving the group's immediate priorities, build momentum and realign the group initiatives under the new leadership.

In reviewing the year's performance, I want to make it very clear to all shareholders that neither your Board nor Amanda and the management team is satisfied with recent performance and is addressing this with clarity and urgency. We have put behind us a period where our teams were distracted by external factors including a raft of regulatory inquiries, industrial action and CEO succession. We have adjusted to the new normal of intensified competition, delivering value to our customers while leading on quality, range and convenience. As a Board, we are committed to support management to address the challenges, reinforce a discipline of making every dollar count and simplify the business to drive better outcomes and accountability.

We are starting to make good progress. We have reduced costs and taken steps to simplify the business and elevate our focus on our cornerstone food business. We should not forget the foundations of the group remain strong, our iconic brands, vast store network, best-in-class loyalty, digital assets and incredible team. Amanda will shortly outline the clear plans in place to improve our performance in the medium term and capitalize on the significant long-term growth opportunities ahead of us.

I would now like to cover the group's performance on safety. Two years ago I spoke about the Board’s commitment to review the FY '23 STI based on the outcomes of the formal investigations into the 2 tragic fatalities in that year. SafeWork New South Wales investigation of the Jesmond supermarket fatality in November 2022 resulted in no further action being taken. However, in June this year, SafeWork New South Wales finalised its investigation, and commenced legal proceedings against Woolworths Group, in relation to the fatality at the Sydney Regional Distribution Center in June 2023. Following a careful consideration of the findings of SafeWork New South Wales, the Board has applied a further discretionary reduction to the executives in roles with responsibility for safety within distribution centers at that time.

While we were confident we had a strong safety culture within the group, we identified a number of areas where we could continue to improve. Through focused efforts on risk reduction, proactive injury prevention and early care, we have started to make those improvements and we achieved a 6.2% reduction in our TRIFR in FY '25. In addition, the reduced injury severity and frequency led to an improved injury severity score this year. The Board is committed to upholding the highest safety standards for the group to ensure we maintain the strong foundation and culture that keeps all our team members, customers and contractors safe.

Turning now to Board renewal. As announced in August, Holly Kramer will retire at the conclusion of our AGM today after more than nine years of service as a Non-Executive Director. I would like to sincerely thank Holly for her dedication and valuable contribution to the group. During Holly's tenure, she has had a significant impact on enhancing the group's remuneration approach and disclosure in her time as Chair of the People Committee as well as elevating the group's sustainability agenda in her most recent capacity as Chair of our Sustainability Committee, setting a strong foundation for the years ahead.

I was pleased to also announce Ken Meyer's appointment to the Woolworths Group Board as a Non-Executive Director. Ken brings extensive food retail experience to the Board, having spent 24 years at Whole Foods Market, a U.S.-based grocery chain renown for its high quality fresh food, in-store experience and customer service. Ken’s entire career, helping to build Whole Foods and subsequently his experience in private equity, has been about food retailing, and in particular, fresh and grocery innovation. We are delighted to have somebody with the depth of Ken’s food and grocery retail experience join the Board.

On a personal note, I would also like to take this moment to acknowledge the passing of former Executive Chairman Paul Simons AM in May of this year. As you may recall, Paul attended our AGM last year. We were very blessed to spend that time with him as part of our 100-year celebrations. Over a lunch a few months before his passing with Amanda, I can vividly remember his considered, constructive advice on pricing and fresh food. Paul led Woolworths from 1987 to 1995 during a pivotal time in our company’s history. Paul will be remembered for instilling important customer values into the business which remain as relevant today as they were during his time of his leading the company.

Moving now to the group's sustainability agenda. This year marks the end of our 5-year 2025 sustainability plan with meaningful progress achieved across key focus areas. Notable highlights over the plan include the group's efforts to support our community through $480 million in direct contributions, repurposing surplus food to deliver over 165 million meals to people in need through our partners, addressing modern slavery in our supply chain, and removing over 20,000 tonnes of virgin plastic from our own brand products since 2018. Over the last 5 years, the group has delivered an estimated $2.6 billion in net societal benefit through our investment in initiatives addressing hunger and food waste, plastic packaging, decarbonization, healthier eating and human rights.

Launching in FY '26 is the next iteration of the group's sustainability agenda, focused on the areas where we can drive the most significant impact including sustainable food systems, waste and circularity, affordable nutritious food, social impact and advancing human rights in our supply chain. I am always inspired by the ways Woolies responds to the needs of our community. Whether that is in times of floods or fires when we help make sure communities have access to essential goods or how we have taken on the challenge of recycling and food waste. We provide many young people with their first job or careers spanning many decades for others. We are at the forefront of the productivity challenge Australia faces as we invest into automation, digital tools and AI and to make jobs more rewarding and Woolworths Group more efficient. As shareholders, these are things that we can all be proud of.

Before handing over to Amanda, I would like to take this opportunity to address the shareholder resolutions that will be put to the meeting later today. The resolutions reflect a number of topics including the reporting of farmed seafood, the group's seafood sourcing policy, the classification of beef in relation to deforestation and the utilization of PEFC certification as part of our pulp, paper and timber policy. As outlined in the Notice of Meeting, the Board does not support these resolutions.

Starting with seafood. Responsible sourcing of seafood is important in meeting our customers' ongoing needs for healthy proteins. Our seafood sourcing policy requires all own brand seafood sold in Australia to be third-party certified or independently verified as ecologically responsible. Suppliers must also meet relevant legislative and regulatory requirements. As part of our ongoing due diligence process, we obtain advice from external seafood and animal welfare experts, we monitor research, standards and regulations as they continue to evolve. We also engage a wide range of stakeholders including industry bodies, suppliers, government, environmental groups, non-government organizations, scientists and the local community.

Specifically on Macquarie Harbor, we continue to be informed by scientific and government updates, including the determination made by the federal minister for the environment and water on 14th of August 2025 that allows salmon farming to continue in Macquarie Harbor. Latest scientific reports have also shown improvements in estimated Maugean skate population, and positive impacts from collaborative government and industry captive breeding and reoxygenation programs. However, we are taking action as a group through adopting continuous improvements that directly address the issues of concern. This includes working with all 3 salmon suppliers to undertake feasibility and gap assessments for the new certification standard issued by Aquaculture Stewardship Council in May this year. The updated ASC certification aims to reflect the latest best practice standards for farmed seafood production globally.

In 2024, we committed to investors to disclose our approach to assessing and managing risks and impacts of our own branded farmed seafood on endangered species. We've taken a proactive approach to identifying and addressing nature-related risks, informed by the Taskforce on Nature-related Financial Disclosures framework. We believe this global framework is the most appropriate as it can be applied across all products, all nature-based risks and impacts and ensures an efficient and consistent approach to assessing and addressing nature-based risks through our global supply chain. As outlined in this year's sustainability report, the assessment confirmed no new material risks exist outside of those already being actively managed through our seafood sourcing standards.

We remain committed to ongoing appropriate transparent reporting to shareholders and other stakeholders. This includes our commitment to providing additional disclosure on the methodology and outcomes of our risk and impact assessments of own brand farmed seafood in our sustainability disclosures as part of our annual reporting suite next year.

Turning to beef in relation to the group's no deforestation commitment. Firstly, I want to stress that we continue to recognize fresh beef as a primary deforestation-linked commodity under our no-deforestation goal. This was outlined in our 2024 sustainability report, the 2025 sustainability report and the group's publicly available no deforestation policy.

In accordance with our SBTi validated emissions targets, we have adopted the FLAG methodology which requires us to focus on all 5 of our primary deforestation-linked commodities, namely cocoa, soy, paper, pulp & timber, palm oil as well as fresh beef. As noted in our 2025 sustainability report, the European Commission recently revised the deforestation risk rating for Australia. This risk rating was referenced as a relevant factor when determining prioritisation of effort at the time of setting the group's no deforestation goal. The recent change has informed our approach, but importantly, it does not change the scope of our no deforestation goal and its application to fresh beef.

Addressing now resolution 5e. We mandate the sustainable sourcing of pulp, paper and timber products and packaging. We utilize globally accepted and widely adopted certifications, FSC and PEFC, to validate deforestation-free sourcing, in addition to the use of recycled content. Many leading companies and peers globally and domestically use both certifications. We regularly review the integrity of accepted certifications, including through consultation with suppliers, industry and other key stakeholders, and will continue to do so.

In conclusion, the year ahead will be a critical year for rebuilding momentum across the group as our leaders set about executing our priorities and delivering on our strategy. Under Amanda’s leadership, Woolworths Group is looking ahead with a measured and determined confidence. As I said right at the outset, your Board and your management team are totally focused on realizing our potential as a group by staying true to our purpose whist intensifying our focus on delivery and performance. Finally, I want to thank all of our team members across the group, who despite the various challenges of this year, remained focused on putting our customers first. Thank you very much.

Thank you, Scott, and good morning everyone. I also acknowledge the traditional owners of Darug Country, and pay my respects to Elders past and present and any Aboriginal or Torres Strait Islander people with us here today or online. It is a privilege to be with you all and thank you for joining us. Let me begin by echoing Scott's sentiment and acknowledging that it has been a difficult year for Woolworths Group. I commenced as CEO in September last year and a number of challenges in FY '25 resulted in a financial performance that was well below our expectations, and those of you, our shareholders. However, we have taken action, to set the business up for the medium to long term, and to reposition the group for sustainable growth. While we acknowledge that it will take time for the full benefits to be realized, we remain confident the steps we are taking will lead to meaningful improvements for our customers and shareholders.

Our ambition is to be the first choice for customers in our cornerstone food business and become a more focused, lower-cost retailer. Food is what we are famous for and a thriving Food business provides a strong platform for the group's success in the long term and our ability to deliver strong shareholder returns. Over the medium term, through sustainable growth in Woolworths Retail supplemented by higher growth from our complementary businesses and services, our ambition is to deliver mid-to-high single-digit EBIT growth, which will support our double-digit total shareholder return aspiration.

I am confident in our ability to deliver a much improved performance and today I will provide an update on our strategic priorities and how we plan to make Woolworths Group a better and stronger business for the future. But first, turning to our performance in FY '25. Despite food inflation stabilizing, broader cost-of-living pressures continued to weigh on household budgets leading to value-seeking behavior in a very competitive retail market. Our Australian Food business was also materially impacted by extended industrial action leading up to Christmas last year. The group sales in FY '25 increased by a normalized 3.6%. Pleasingly, we saw greater stability in the second half in Australian Food as we worked hard to recover from supply chain disruption, delivered lower prices and focused on improving our retail execution. However, a decline in underlying earnings in Australian Food, together with other one-off costs and lower earnings from BIG W, contributed to Group EBIT declining by a normalized 12.6%. I want to acknowledge that this performance was disappointing and well below our expectations.

New Zealand Food continued to make progress on its transformation with an improved earnings driven by momentum in key focus areas of value, fresh and convenience. In BIG W, we saw good customer growth with quarterly sales growth rates increasing sequentially over the course of FY '25. We have also seen items and transactions grow as we worked hard to reposition our range and provide more value to customers in a competitive market. However, we recognize that we need to progress the transformation of the business and expect an improved result in FY '26. During the year, we worked constructively with the ACCC through its supermarket inquiry process, and in March the ACCC released its final report. It found that grocery price inflation has been lower in Australia than in most OECD countries and found no evidence of excessive supermarket prices.

In February, we highlighted 3 key focus areas to improve the short-term performance of the business. We are on track to deliver $400 million in cost savings by the end of the calendar year. We are improving our retail execution and have taken deliberate steps to address the areas that matter most to our customers, including value, range and product availability. Customers have told us they want reliable lower shelf prices every time they shop with us. In Australian Food, we launched lower shelf price in May where we have lowered the price on over 750 everyday items with a commitment to longer-term price reductions. This isn't just a short-term investment, this is about lower prices on products we know our customers regularly shop for, and providing genuine, dependable value they can count on.

As part of this we've focused on everyday family lines like frozen berries, chicken schnitzels as well as other essentials like flour, bread, rice and nappies. This was in addition to offering more specials with deeper discounts and absorbing cost price increases in key areas like meat. While there's still more to do, we have seen early positive reaction from our customers which has continued into October. They're noticing the improved value for money, as well as improvements in service.

During the year we also simplified the way we work, with significant management changes and a new organizational structure that's better aligned to our strategic priorities. Over the last 6 months, we reviewed all of our businesses within the group to ensure each had a credible path to delivering appropriate returns. As part of this, we announced the closure of MyDeal's customer website, and we consolidated or exited a number of businesses to elevate our focus on our core food business. We are committed to providing customers with good value as well as being a lower-cost retailer with a strong ongoing productivity agenda and restoring a discipline of making every dollar count across Woolworths Group.

Despite the challenging year, we have made solid progress on our strategic agenda and that gives us confidence for the future. Our New South Wales supply chain transformation reached important milestones during the year, including the opening of the Moorebank NDC and Auburn CFC. I am delighted that our Moorebank RDC has commenced operations this week with the first cartons going to stores. We are also well advanced in the construction of the Sydney Chilled and Fresh DC, with the new automated, temperature-controlled site complementing our Moorebank DCs and will complete the renewal of our New South Wales supply chain.

Together, the new sites will materially improve the experience of our team and customers and unlock greater efficiencies across our supply chain network, whilst also strengthening our fresh offer. Through automated technology, our new sites will improve pick accuracy in our sheds and provide tailored pallets for each store, right down to specific aisle layouts, making it faster and easier for our store teams. For our team, new automated pallet builders will help reduce manual handling making it a safer working environment, and our customers will see a real difference with better product availability and fewer out-of-stocks.

In Victoria, MSRDC, the group's first automated DC, is the blueprint for the New South Wales supply chain transformation and has played a key role in driving productivity and customer availability with a throughput of 2.5 million cartons per week. This gives us confidence in the benefits we will see from our new, co-located sites at Moorebank. We know we lead in convenience, and one of our greatest assets is our customer reach through our store network and leading e-commerce business. Strong digital and e-commerce growth was a key highlight during the year with group e-commerce sales increasing by a normalized 17% in FY '25. Convenient, on demand options like MILKRUN and Direct to Boot Now are our fastest-growing propositions as customers seek more convenience and sub-60-minute e-commerce sales tripled in FY '25.

Pick-up orders are also growing strongly and to support customer demand, we have continued to invest in our store network, which services both our customers looking for a rapid pick-up option and MILKRUN. During the year, we added over 200 Direct to Boot Now sites and expanded MILKRUN to 515 stores. Our capabilities took a big step forward with the opening of our Auburn CFC in May. With capacity to serve 60,000 orders per week, the new automated CFC will free up stores to meet the growing demand for delivery and pick-up services in the high density catchment and growth areas of Western Sydney.

Our complementary service businesses are continuing to grow and are an important earnings contributors to the group. Cartology, insurance, mobile and our third-party supply chain business PC+ all delivered solid sales and profit growth in the year and offer significant long-term earnings opportunities.

Our team is at the heart of our business and one of our greatest strengths. Despite having to navigate a number of challenges, we have seen the highest Voice of Team scores for our retail store team members since the peak of COVID in 2021, which is an incredible testament to their resilience. Ensuring that every team member goes home safely every day is our primary responsibility. In FY '25, we worked hard to strengthen our safety foundations, rolled out further programs to increase controls for our material safety risks, including plant and vehicle-related incidents. We also launched our new group-wide safety promise, our place, were's safer together, which emphasizes the collective and individual responsibility for safety and wellbeing.

Encouragingly, we have seen an improvement in our safety outcomes in FY '25 through our focused efforts on injury prevention and material risk management. We recognize the important role we play in supporting communities in which we operate and were's proud of the long-standing partnerships we have with our food relief partners across Australia and New Zealand. This year, we celebrated a decade of partnership with OzHarvest and we reached an incredible milestone providing 100 million meals to Australians in need over the last 10 years. This is a powerful example of how we live our purpose every day.

Yesterday, we released our sales results from the first quarter of FY '26. The group's overall sales performance in quarter 1 was below our aspirations; however, the changes we have made to improve our offer in areas that matter most to our customers, including value, convenience and availability are being recognized. Group customer metrics continue to improve on prior periods and we have seen an improvement in sales trends over the last month. In Australian Food, total sales increased 2.1% and excluding tobacco, Woolworths food retail total sales increased 3.8% supported by e-commerce growth of 12.9%. While customers are recognizing the improvements we are making, we know there is more to do to drive sales momentum in Australian Food.

In September, we uplifted our investment in rewards and e-commerce offers and weekly promotions on key family lines like nappies, bananas and chicken breasts, to provide customers with more value and more reasons to choose Woolworths first. Item growth showed a modest improvement over the quarter, but that was offset by deflation in fruit and vegetables in the latter part of the quarter. Growth in on demand propositions was a highlight with e-commerce sales delivered or picked up in under 2 hours increasing by 39% as customers continue to value the convenience.

In Australian B2B, sales increased by 6.2% driven by B2B food with growth in PFD and export meat sales. Sales momentum in New Zealand improved over the quarter as competitor activity normalized with total sales growth of 3.2% driven by strong e-commerce growth and successful promotional campaigns.

In BIG W, total sales including BIG W Market increased 1.0% with a more favorable sales mix reflecting an improved performance in clothing. Looking ahead, we are cautiously optimistic about our key trading quarter. Woolworths food retail sales in Q2 to date have increased by 3.2% or 5% excluding tobacco as we continue to focus on rebuilding momentum.

We are also clear on our longer-term strategic priorities which we shared in August. We have world-class assets and capabilities across our group as well as significant scale that give us a unique competitive advantage and significant potential. These include the strength of our iconic retail brands, our large customer base of over 25 million served each week and a leading loyalty program with 12 million Everyday Rewards members across Australia and New Zealand.

We have extensive digital, data and AI capabilities as well as a network of 1,700 stores, a modern supply chain and finally, an experienced team of 200,000 people. Many of our team have given the group decades of service with the average tenure of our store managers around 20 years. While we operate in a highly competitive market, these strengths, together with our plan and our strong leadership team, give me absolute confidence in our ability to deliver long-term sustainable growth for shareholders.

Over the next few years, we are focused on 3 key medium-term priorities. Starting with the most important, we want to be the first choice for customers for the freshest Australian Food. We are making meaningful shifts for putting customers first and we are determined to win in fresh, range, and on demand e-commerce, while consistently delivering meaningful and reliable value and reliable experiences. We also want to continue to execute well so that customers can count on us every day. And it all starts with Fresh. Fresh is the gateway where the supermarket shop begins. We have the capability to improve freshness and range and showcase our offer through improvements to our supply chain and merchandising, and through the passion of our team. Customers already recognize our range, but in some categories, we can make it easier to shop, and we know there is more to do to optimize our range. Own brand has delivered strong value for customers, but we know we need to do better.

Clearer price tiering, an expanded ‘better’ range and improved quality will enable us to meet more of our customers' needs. We want to continue to lead in e-commerce and expand our on demand delivery and Direct to Boot coverage, personalize and improve customer experiences by leveraging data and AI, and maintain a modern store network that is close to our customers. We are privileged to have 84% of the Australian population within a 10-minute drive of one of our stores.

Moving to our second strategic priority, we need to address underperformance in New Zealand Food and BIG W by improving returns and we are making progress here. While our transformation initiatives in New Zealand have delivered encouraging results in FY '25, EBIT margins and returns remain well below our aspirations. We want to build on our momentum to return to double-digit ROFE over the medium term. In BIG W, we need to sustainably improve performance in a highly competitive market and build on our areas of strength. We are taking the right steps to reposition our range to provide better quality and more affordable options to customers as well as extending our range through BIG W Market.

Finally, we will grow our complementary businesses and services to support longer-term growth aspirations. These include PFD and Petstock as well as group-wide service businesses such as Cartology, Everyday and Primary Connect. To deliver our strategy, we know we need to get the basics right by providing the retail excellence that our customers expect from us. We also need to be a simpler business and increase accountability. We are restoring an always-on low cost discipline across the group making every dollar count and realizing the value of our various investments.

Underpinning all of this is our leading loyalty, tech and AI capabilities which will transform customer experiences, and enable our team to make better decisions. As we look ahead to the important Christmas trading period, we remain focused on delivering a fantastic festive season for our customers. Over the weekend, I was in stores with our teams and I know they are looking forward to helping us deliver great value to all customers throughout the summer. I'm particularly excited about our new seasonal own brand range with over 60 incredible desserts including the new gingerbread cheesecake and the gold Dubai-inspired chocolate and pistachio tarts, in addition to the classics we know our customers love.

We are determined to get back to our best this Christmas and give customers every reason to do their entire shop with us, whether that be in store or online. Our focus remains on restoring customer trust, rebuilding momentum and getting back to the level of retail excellence and performance our customers and our shareholders expect of us. While some of this may take some time, I am confident that the steps we are taking will lead to an improved performance.

I would like to recognize and thank our remarkable team for their commitment that they have shown whilst navigating a difficult year. I would also like to thank our customers for choosing Woolworths and giving us the privilege of serving them every day. Finally, I would like to thank you, our shareholders, for your patience and support. I will now hand back to Scott. Thank you.

Thank you, Amanda. We will now turn to the formal items of business for this meeting. The items of business for today's AGM are set out in the notice of meeting and will be voted on by a poll, which is now open. As set out in the notice of meeting, I intend to vote all open proxies in favor of each of resolutions 2, 3 and 4 and against resolutions 5a to 5e inclusive. I remind shareholders that only resolutions 2, 3 and 4 to be voted on at this meeting are supported by your Board. Our share registry, MUFG, will act as returning officer for the poll.

The first item of business is to receive the financial report and the reports of the directors and of the external auditor for the year ended 29 June 2025. There is no vote on this item. A copy of these statements and reports was published in the 2025 annual report and sent to those shareholders who requested a copy. Shareholders have also had the opportunity to view the statements and reports as well as the FY 2025 sustainability report on our website.

I now invite comments or questions on the financial statements and reports. All questions to the auditor should, in the first instance, be addressed to me as Chair.

And if appropriate, I will ask Tom Imbesi to address the meeting. I'll firstly deal with questions from the floor and then questions submitted online during the meeting. Are there any questions in the room?

Chair, I have a question from Natasha Lee.

Welcome, Natasha. It's nice to have you back.

Thank you, Mr. Chairman. Nice to see you again.

I did have another option to go to another shareholding meeting, but I thought Scott would miss me if I didn't.

That's the case, Natasha.

Just first comment is actually about the format of your annual report. It's a 2-page, and I didn't see a single-page format. So for people of my age and my eyesight, it's a bit difficult to sort of scroll back and forward across the page. But so some companies do have a single-page format. You could scroll down and read if we can ask that, that be introduced in the future.

I'm similarly afflicted, Natasha. So have you got any good ideas then we will make sure to take them up.

Especially as I read thousands of pages a week.

Okay. I certainly don't want to make the annual report excessively long. I'm very conscious obviously of the paper.

Well it's the same page. It's just page length, just having it in a single-page format.

Okay. Happy to hear your ideas.

Just -- so clearing my interest, I'm involved in a domestic violence charity called Lucy's Project. And I'd like to publicly thank Petstock, which has been a great supporter of that charity. Getting to the sort of the questions. Yes, I've noted how the margins have been squeezed and sort of somewhat encouraging that the first quarter sales were up, although below your aspirations. I suppose I worry about, even though sales percentage was up, how that reflects in terms of margins.

Now noting that your competitors, you seem to be sort of pretty much price matching. So in terms of price was kind of like-for-like product, it doesn't seem to be much of a difference like very small, but they seem to be doing better. And I've heard you're talking about some of the problems, the one-off problems you've had and then you're making savings, but I suppose, to what extent have you kind of analyzed what your competitors are doing? And how can that be reflected in to improve your performance? There also seems to be a bit of a disconnect because you want to -- you're talking about a simpler business, but you're increasing the product range. And I know that Aldi kind of maintained their margins by having a more limited product range and I suppose, having specialist over Christmas. But to me, there was a little bit of a mixed message there. So if you'd like to comment about that.

On the sort of a more technical side, interest expenses was up rather significantly sort of like a [ 22% ] increase while your borrowings will increase 20%. I would have expected that the actual interest build to be lower than the growth in the borrowings given we're in a declining interest rate market. And obviously, the borrowings -- the new borrowings sort of happened during the year rather than at the beginning. So can you explain why interest rates -- the interest expense, sorry, was up significantly?

Thank you, Natasha. Thank you for your diligence. I hope that first question, there's a lot in it. So I'll attempt to answer all of the elements in that question. You're absolutely right. Our margin was impacted last year and some of that impact were from some quite material exogenous events, principally the strike. The strike was a very important matter for us to draw a line on because it was all about productivity, but it came at a very significant financial cost in excess of $100 million.

In addition, during the course of last year, we were running 2 supply chains as we ramped up the new supply chain. And as Amanda has referenced, we're really starting to see really good productivity benefits coming on stream as the supply chain continues to perform exceptionally well. We also had in our results Petstock for part of the year, which made some of the margin comparisons a little bit tricky.

In terms of the sales momentum, and thank you for noting it. Yes, we are seeing the early signs of an improvement in our sales trend in the last month, which Amanda has called out. And in terms of margin management and vigilance on competitor structures, we are absolutely vigilant on what best practice looks like across the suite of all of our competitors, how they're performing and where we can learn and do better. But we're also following with conviction, we think the path that's right for Woolworths to restore its sales momentum and get back to growing market share. And Amanda has outlined the key pillars of that, part of which are addressing the customer for where they're at in these quite changed times, simplifying the way we work and continuing to take cost out of the business to empower people to make better decisions and quicker decisions as well as identifying those areas of underperformance within the group.

You pleasingly heard and it was evident also in Q1 sales, we've actually had quite strong performances in recovery. New Zealand continuing to be early days, but a significant 40% improvement in profitability last year off a low base with more to come. We saw strong sales in our PFD, our foodservice business, a recovery in sales in Petstock as well as they emerged from the restructuring after the divestments that were required under ACCC. But your reminder and your challenge to us to make sure that our growth is obviously profitable growth is an absolutely sensible one. Our focus is on restoring sales momentum in Australia Food.

Okay.

The second question was on interest and borrowings. That will simply be the interplay between our fixed versus floating rate mix of borrowings. As you say, interest charges were up somewhat. These things don't transmit immediately through to lowering borrowing costs. But with good cash flow management, and Steve and the team are very much on top of all of that and managing our working capital to be as efficient as it can be, obviously, with lowering rates, we'd expect that to be improving into the future. Thank you very much, Natasha.

Chair, we have a question from Mr. David Kingston.

Look, I'm basically here today to support Woolworths. I think the market's overreacted against Woolworths. I think it's a great company. And it has some challenges, but I think I'm confident it will bounce back. Even in the last couple of days, as I expected, Woolworths has rebounded in share price and Coles has come off. I think the market got it wrong. But look, let's acknowledge that Woolworths was once the market darling. Coles now has superior growth. Since mid-'23, Woolies share price has fallen from $40 to current $28. Over the same period, Coles has gone up from $18 to $22. It's a bit anomalous because the revenue from Woolworths Australian supermarkets is more than 25% above Coles.

Woolies has 1,300 supermarkets compared to Coles at 860. Both have a similar EBIT margin at 5%, 5.5%. The market, in my view, has got it wrong. Woolies market cap now $34 billion, only marginally higher than Coles. Look, let's look at the growth. It's a short-term thing. I think I'm confident Woolies can turn it around. But even in the quarter just ended, Woolies' supermarket sales up 2.1%, Coles up 4.6% normalized. Getting to my 2 questions, Chair. Look, having been market leader for many years, perhaps Woolies became complacent a few years ago.

I feel for you, Amanda, you inherited some legacies after taking the reins from Brad. Who can forget the Transmash on 4 corners when Brad walked out. I accept it will take a while for Woolies to regain full momentum. A vital interest issue, as you correctly say, is consumers trust in pricing, which is referred to on Page 42 of the Woolworths' FY '25 presentation. Rebuilding price trust. Good to see in yesterday's quarterly that the group VOC NPS, a measure of consumer confidence, was up 3 points compared to the prior year, a step in the right direction.

So my first question, Chair, is I just appreciate some amplification on the issue of rebuilding price trust when and why was that trust lost? That's my first question. Do you want me to keep going with the second one?

Please.

The second one is a little bit subjective, and you may or may not agree, but I will provide it anyway. In my view, in basic retail, being warm and folksy is important. For example, Chemist Warehouse and JB Hi-Fi, the colors and signage are very evocative. In my view, happy for you to disagree, Coles is more folksy than Woolworths. CEO, Leah, appears in the annual report in a red Coles polo T-shirt along with the team, whereas the Woolies Board, extremely professional, but not folksy in their annual report photo. I appreciate it's subjective, Chair, and it's probably not a question that you're expecting in your Q&A preparation, but I'd just be interested, has do you think potentially subject to review, Woolworths has become too corporate. Certainly, in my opinion, it became arrogant, which is fair enough, it was market leader for many, many years. Does Woolworths need to step it down a level, become a little bit more focus and less professional and corporate.

Thank you, shareholder. Can I just firstly thank you for, I think, an extremely well researched and very balanced set of questions. There's a lot in there. Firstly, can I also share your confidence about the underlying strength of this group and the extent to which there is just an enormous opportunity for us to continue to drive superior performance to take advantage of those very, very strong fundamentals, and Amanda outlined those, whether it's our store network, the brand, our reputation for quality, range, our lead in convenience, leading digital assets and I think a portfolio of adjacent businesses that can make our food business stronger. We lead the market in so many areas, and we now need to convert that into operational performance and shareholder value. I could not agree more.

You specifically asked a question on price trust. Again, I think that is a fundamental question, and that's clearly an area where Woolies took its eye off the ball. We took our eye of the ball at a period of quite dramatic change, but we were significantly distracted by other exogenous events and the customer changed their purchasing patterns quite significantly during that period. What I can assure you, and the proof is in the pudding, we have responded. And you're starting to see, as you called out, that lift in customer -- underlying customer metrics that are always the precursor in our experience to sales growth.

Customers are recognizing the lower shelf price initiative, now over 750 prices on lower shelf price, continuing good value through specials and of course, our market-leading digital platform and all the boosting offers that are out there that I certainly hope you all take advantage of. All of that is landing with our customers. We're getting improved metrics through our Voice of Customer stores, and we're starting to see it in sales. It's early. We've got a lot more work to do. And I'm confident that Amanda and the team are absolutely focused on that as their #1 priority.

The second question was around our folksiness. So putting aside the dress code for the Board, we'll take that one on notice. There's one statistic that I would like to share with you in a minute or actually refer to it as well. And this, I think, will give you some confidence that Woolworths has not got a corporate mentality. Our frontline teams at a store level throughout all the disruption, the loss of sales momentum, the change, the simplification, our frontline team's engagement of Woolworths, belief in the company, belief in their leadership has improved through this and hit a record high last month compared to pre-COVID levels.

They are the people who are facing the customer. And actually, they see the positive changes that we're making, simplifying their work, better and sharper on pricing, better availability, investing into our fresh fruit and produce departments and others to really lift performance and win back that customer trust and momentum. So I think at that level, we continue to be inspired by their engagement with the company and the customer feedback we get from them at the front line. But in terms of tone and manner on the annual report, I'll take your observation as noted. Thank you for sharing with us, shareholder.

Chair, I have a question from shareholder [indiscernible].

Welcome, shareholder.

[indiscernible] representing the Non-Smokers Movement of Australia. You probably know where I'm going. Now it's up to you. I was going to direct this question to Mr. Harrison, the CFO, but he's not here at the moment. So this is for you, Mr. Perkins. Now in an article in the Sunday Telegraph in June this year, the Lung Foundation of Australia wrote, "Supermarkets should be banned from selling cigarettes, which kill on average 66 Australians daily, 365 days a year." He also wrote that Coles admitted to selling enough cigarettes to kill 1,600 Australians a year. I repeat, 1,600 Australians a year. Since Woolies has more than 10% sales than -- grocery sales than Coles, we at Woolies kill over 1,600 a year from a tobacco as well. My question is a simple yes or no. With all your respect, do you think the Woolies Board has a moral courage to ban tobacco sales in the near future as Aldi does.

Shareholder, thank you for a very profound question. Through personal family experience and with another hat, I chair the Garvan Institute of Medical Research and have had personal family experience with cancer, it's a -- smoking is a scourge. The regulatory rules, environment, disclosures have all worked in as much as there is a precipitous decline in the amount of smoking in our community. So I personally have absolute sympathy with the point that you're raising.

We face a dilemma. The dilemma is, there are still customers who wish themselves to make the choice of smoking despite that. We have, as a Board, contemplated the very action you've talked about, but feel that with the appropriate disclosures and packaging, the restrictions on selling and must be sold through our front -- with identification at the front sales desk that we are doing our bit to comply with the rules and regulations, but ultimately leaving it up to individuals to make their own decision. You do note that this is a very significant decline in our sales. And frankly, we're quite prepared to see cigarette sales trend to 0 over time. That's the reality we face into. So we have a dilemma. I have a very strong personal view on this, but we also have to look after the interest of customers who themselves choose to smoke.

My question was, does the Board have the moral courage to ban cigarette sales in the near future? That was the question. Because, as you know, dead customers can't buy cigarettes or groceries.

Well, we're not about to ban them. We're about to comply with the regulation and the answer is no, so we won't be banning them, but we will be complying with ever stronger regulation, and they are slowly -- not slowly, they are quickly banning themselves. Thank you, shareholder.

Chair, we have a question from shareholder, Tara Jones.

I'm Tara Jones, Program Manager Plastics and Packaging from the Australian Marine Conservation Society, Australia's leading national charity dedicated solely to protecting our precious ocean wildlife. Plastic pollution harms marine life through smothering, entanglement, starvation and reduced fertility. Plastic -- in Australia, packaging makes up 58% of litter collected during cleanups, which includes Woolworths branded products. Packaging can become pollution at each stage of its life cycle, including manufacturing, use and disposal. And research shows that as plastic production increases, so does plastic pollution.

Woolworths reported a reduction of 3,200 tonnes of virgin plastic that is new plastic made from fossil fuels in the last financial year. However, this does not necessarily mean a reduction in the company's total plastic packaging use. My question is, will Woolworths commit to publishing data annually on how much plastic it uses overall starting with the 2025-26 sustainability report to provide shareholders and customers transparency about the company's contribution to plastic use and pollution.

Thank you, proxyholder for raising a very, very important issue, and it's one of our sustainability priorities. We have a lot more work to do. We know that our customers are very sensitive to this issue of packaging. And while we're proud of the fact that since 2018, we've taken 20,000 tonnes of virgin plastic out of our own brand and as you mentioned, 3,200 tonnes last year. And we're also proud of the fact that over 80% of our own brand product has packaging that can be recycled.

There is a lot more to do. And the challenge is understand -- 2 challenges. Firstly is quantifying the amount of plastic that comes through our stores from not our own brand, but from vendor brands, and we continue to work with them to improve the visibility of that. So I can commit to you that we will continue to improve our disclosure around total packaging. But at this point, we don't have and can't get for all of the vendors who sell products to us, the precise breakdown of recyclability in their packaging mix. But we are working on it, and we would like to be able to do that.

The second challenge we've got is a technology challenge. And we saw this in COVID, but there are certain products where customers really want the perceived and sometimes actual security of some form of see-through packaging, which ends up being plastic. Now in our own brands, we have been trialing use of much more cardboard and use of organic-based see-through films to be able to deliver that sort of functionality and protection to our customers. So we're up for this. It's one of the sort of 5 core focus areas going forward of our sustainability program. So I think we might hear from you again next year at the AGM. And hopefully, we'll have some more disclosure that might go some way to satisfying you.

I understand if Woolworths isn't able to disclose its vendor-branded product, plastic use. Is it able to commit to disclosing its own brand plastic packaging use next year in the sustainability report?

We'll look into that. I think there's a good reason we should be able to do that, but we'll look into that. Thank you.

Chair, I have a question from Julieanne Mills from the Australian Shareholders Association.

Welcome, Julieanne.

It's Julieanne Mills on behalf of the Australian Shareholders Association, here representing 800 shareholders and more than 2 million votes. Firstly, I'd just like to say that we support a lot of the views that Mr. Kingston was saying now that we appreciate you've had a really tough year, and we can see the turnaround. But apart from that, can we just talk about BIG W? BIG W has seen a number of years where there's been poor returns. You're now looking at committing to a new separate technology platform. Can you explain how this will provide a better outcome for BIG W? And how does a new IT system give you strategic optionality for BIG W?

Thank you, Julieanne. You're absolutely right. The performance in recent times of BIG W has not been satisfactory and I think nobody more passionately believes that than Dan Hake who runs that business reporting to -- directly to Amanda. So it's receiving a lot of attention. Pleasingly, the underlying customer metrics on BIG W have been improving. And you saw the Q1 sales that, again, I thought were a solid result, not just for the headline number, but for the improvement in the critical apparel category, which is really of the 4 major areas of BIG W, probably the one that we were underperforming most in, and it's pleasing to see that progress. The BIG W, it may look like a supermarket and -- but it's really quite different in terms of a supply chain.

And what we felt after the strategic review was that it was important for BIG W to actually have an IT system that was fit for its purpose to drive its own productivity as a lever to improve performance. So that's what we've done by setting up a separate IT instance for BIG W. Yes, that will involve some investment of capital, but we believe there's a good return on that in the medium term.

Can I ask another question?

You can.

There's been a significant reorganization of the senior management since Amanda Bardwell became CEO. And Annette Karantoni, I hope I pronounced that right, has been appointed MD Woolworths Retail with broad responsibility. What is the thinking behind creating such a role or that new management structure? And can you perhaps talk to Ms. Karantoni's experience in that area?

Yes. So the underlying -- and I might pass to Amanda to add something. The underlying -- actually, why don't you go Amanda?

Yes. Thank you. So yes, we're absolutely delighted to have Annette net Karantoni lead W Retail business. Annette has extensive experience in retail and has been with us for decades at Woolworths Group and in fact, started in our meat department. And so from -- in terms of experience from a retail perspective, she has worked across a number of different parts of our group, including supply chain, a number of different buying and operations roles as well. So we're delighted to have Annette lead the group going forward for W Retail.

Our intention was to simplify the way that we work. And previously, we had a number of different parts of what we would consider to be W retail now, reporting into different leaders, and it was creating a level of complexity. And so within retail, we now have our supermarkets business. We've bought our own brand business, which was reporting to a different leader into that same group so that we're able to have a more unified experience for our customers as they shop categories. We also had our meat business reporting somewhere else differently, and we've brought that into the W Retail Group alongside our metro business, which also was reporting to a different leader. And so we now have a simplified structure, really focused on our retail stores business under Annette. Thank you.

Chair, we have a question from Shannon.

Good morning, Chair. My name is Shannon Akers. I am representing Australian Ethical Investment. Our funds hold 2.8 million Woolworths shares worth $75 million. Woolworths has 4 shareholder requisitioned sustainability resolutions on the agenda this year, significantly more than its closest competitor, Coles, which has only 1. This disparity reflects growing investor concern about Woolworths' approach to sustainability. Woolworths is perceived to be backtracking on its no deforestation commitment by no longer classifying Australian beef as high risk, despite strong evidence that the beef sector is a leading driver of Deforestation in Australia. The company has not provided a consistent or credible explanation for this change. And as a result, Coles is now seen as overtaking Woolworths in its efforts to address deforestation in its supply chain.

Coles is now also ahead on animal welfare, having made more progress on phasing out caged eggs and setting a clear deadline to reach 100% cage-free eggs in contrast to Woolworth's open-ended approach. On seafood sourcing, Coles has been more transparent and proactive acknowledging risks and taking steps such as reducing salmon sourced from Macquarie Harbor and trialing alternatives. So my question is, Woolworths has long been seen as a market leader with higher standards, including on sustainability, but these recent decisions suggest it may now be content to follow rather than lead. Is Woolworths choosing to compete on the lowest common denominator when it comes to environmental and ethical issues? And if that is not Woolworths' strategy, will the company take shareholder requisition resolutions as an opportunity to reflect on its current approach and commit to rebuilding trust with stakeholders?

Thank you for the question, shareholder. Frankly, nothing could be further from the truth across the board. I think you, as shareholders, should all be very proud of what has been achieved across our sustainability agenda. It is a vast and ambitious agenda that -- where Woolworths has taken numerous leadership positions and generated real value for the community. You referred to some specific matters that I think are quite poorly characterized, and I will address those under the shareholder resolutions in respect to farmed seafood and deforestation.

But if your underlying question is, is Woolworths about to trade off the progress we've made on sustainability, are our standards changing. Nothing could be further from the truth. And I think when I address maybe the specific questions that are embedded in your question, farmed seafood, deforestation, I think you'll understand our position. So we have absolutely no plans, strategy or aspiration but to continue to play a meaningful and industry-leading role on the areas of sustainability that matter to us. So you will see, going forward, continued leadership in terms of disclosure and standards around climate because it's absolutely vital area for the Woolworths network. Last year, more than 100 days of operational disruption through our network because of climate change, floods, fires, storms.

You will expect us to be playing a leadership role in respect of waste, circularity and recycling. We're very proud of the fact that we divert 84% of all of our expired food away from landfill and repurpose that through to meals to homeless people. You'll expect us to take a leadership role in terms of nutrition, where we lead the market in terms of own brand -- Health Star rated own brand sales. You would expect us to also play a leadership role in terms of the social impact of what we do. I'm very, very proud of this organization for the 100 Mini Woolies that set up throughout the country looking -- giving people with meaningful disability, the opportunity for work experience in a Mini Woolies supermarket set up on a school for special needs people. We now have 100 of them across the country.

And I'm also very proud of the market-leading position acknowledged independently we have in terms of modern slavery in our supply chain as set out in our modern slavery report. So I think we can assuage your concerns but we would have a very different read of the circumstances in that picture you put together. And I'm going to address specifically some of these matters in the ensuing resolution discussion. Thank you, shareholder.

Noting that there's no resolution related to Coles' losses commitment around cage-free egg commitments. Any comment there?

Well, we have -- we've been very clear on our cage-free commitments. We're 100% cage-free in New Zealand. We're on that journey in Australia. I believe we're about 80%-something, but we had avian flu. So what Avian flu meant that we had to support some of our suppliers who are on this transition to cage-free. So there's no question about the destination.

Chair, I have a question from shareholder, Danielle Wood.

My name is Danielle and I reside above a Woolworths store in the eastern suburbs where there's 110 units. We love having Woolworths underneath us so handy. However, operations cause disturbance to residents from 5:00 a.m. to 11:00 p.m., 7 days a week, except for public Holidays. The least Woolworths Group has with the owner of retail, favors retail over residential. This was negotiated before the first brick was laid. My question is with Sydney's increase in mixed-use development, what planning has been put in place to prevent residential in mixed use being negatively impacted, mainly due to lack of sleep and rest?

Thank you, shareholder. I would also invite you -- Ralph Kemler is in the audience here. There he is. To speak to Ralph in particular about any issues you might have with your particular store and our compliance with council regulations, right? So if you've got any specific issues, Ralph runs all of our property and leasing activities, and he'll be able to talk to you about that.

Okay.

The bottom line is it's actually very, very difficult for Woolworths to build mixed-use developments in city precincts because of the very stringent rules, quite rightly so, by the way, the council's place in and around the very matters you're talking about. So we don't set the rules. Councils set the rules and regulators set the rules. So I think genuinely, this is a subject which you're best to take up with your local council in respective of the way in which they authorize these developments.

Of course, all of our large developments are open to attenuated public scrutiny and submissions from affected residents and you would obviously be more than entitled to express your views or anybody, any shareholder or any customer affected by one of our developments.

Just before I go, I had...

I did like to thank you for the plug as well. I did note you as well. Thank you.

I have been dealing with your Woolworths management over the last 5 years about this issue. The soundproofing was never done, although it was kicked off as being done, council approved it, and Woolworths have had to do that soundproofing. However, because it wasn't done prior to installation of equipment in the back room, it will never be what it should have been. So I'm happy to speak with Ralph.

Please do that because we don't want unhappy customers, and we set very, very high construction standards. So I'm sure Ralph will have -- will be able to clarify the situation.

I'm sure Ralph is probably aware of it anyway.

Chair, we have a question from shareholder, Jo Wright.

I'm a shareholder and also an employee, a team member. Did not have a prepared question because I promised myself I wasn't going to ask something this year, but anyway, you opened the door with regards to comments about safety in your report. And I'm starting to think that our store is perhaps on a different planet to what you're talking about. Last year, I wrote to you with regards to issues of safety that we were experiencing and you passed the baton to Ms. Bardwell to respond, which she did pretty much immediately, which is appreciated.

This year, I wrote directly to Ms. Bardwell with evidence just featuring on our store and the issues we are having. And in the 12 months since, all I can say is nothing has improved. In fact, I think it's got worse. I'm just after a confirmation really from Ms. Bardwell that she's received that letter. And I suppose we're just continually hopeful of change. We're doing everything that we came from a store perspective from the department manager, the store manager, the group operations manager, and we are getting mixed messages, mixed responses but still no change.

And from a personal perspective, this issue of safety became very personal for me this year, which I outlined in the letter to [ Ms. Gabel ] it's -- yes, there's been no change. And I'm not sure why -- none of us understand why? And it doesn't seem that there's any consequences for what's happening. And so unless somebody gets fired from a perspective, that will do it. And whether that's at a store level, a mid-level or a top level, not suggesting any member of the Board. I'm just suggesting that the person that's in-charge of these pallets going out to the stores, if there's no repercussions there, then it just falls down through the line.

So thank you for expressing those views. As you'd appreciate, shareholder and team members as an Annual General Meeting. And I think that is anything pertaining to either your employment or particular store condition, especially because you've written to Amanda, I would invite Amanda and you to connect to discuss that in particular. I am very aware shareholder that we have had intense focus on the store given the issues you raised last year and during the course of the year. And my understanding there have been more than 10 meetings on various issues relating to the store.

So we are certainly listening -- and as you will have seen, I think, outlined in our annual report, and I've spoken to it today, the health and safety focus and the uplift in results, the rigor of training and the overall safety environment has been truly something that I think has been recognized externally, and we are actually very pleased with that progress. To the extent that I'm hearing that there are safety issues in your store that concerns me, but I would invite you to pick that up with Amanda. Thank you for expressing them.

Chair, I have a question from shareholder, Mindy Woods.

My name is Mindy Woods. I'm proud Bundjalung Woman and Native Food Chef. The native food industry, $160 million and booming industry. And despite your reconciliation action plan across the group, we're still seeing a lack of representation of our beautiful foods on your grocery store shelves. So I'd like to ask a question of what's being done to address investment into First Nations growers and producers to address this critical gap.

I love this question. I really think there's something in this. And I am sure we could be doing a better job. 55,000 years of provenance, properties, flavor profile, there's got to be something in here for us. We have -- are of course, proud of some of the other areas of progress we have made with indigenous procurement now over $30 million. And we were actually a finalist, the only large retailer, finalist for Supplier of the Year at Supply Nation, which I personally attended, a real area of passion.

And there are pockets of excellence around. I think it's [indiscernible] coffee, Dreamtime Tuka right? But there's more we can be doing. And inspiring your chef. I am. Inspiring chefs like yourself, I think, can probably teach us a lot. So I would really encourage you to connect with -- maybe it's Annette and the team and to share your wisdom because Woolies is all about unique products. And they're all about products that customers fall in love with. We've got to get that ramp up. So I would encourage you to share your voice and your wisdom and expertise. So thank you for raising it.

Chair. I have a question from shareholder, [ Jade Marks ].

Hello. I'd just like to say what are you doing about AI because that seems to be the buzzword? And I'd also like to say I really appreciate that you do recycle the food. I think that's a brilliant value. I've got a lot of Scottish blood, so we love being frugal. And also, with the BIG W's thing, assuming H&M recycle clothes, have you ever thought of doing that and maybe turning the clothes into felt or something and then -- and applying the AI into recycling as well?

I'm going to invite you to take that up with Dan Hake, if you could put your hand up, Dan. I don't know whether we actually haven't recycled clothing. But Dan is going to speak to you about it, and if you can share the thoughts. So yes, AI a gigantic topic. We happen to have a Board meeting almost hopefully not quite, but a very significant part of our Board meetings this week were devoted to AI.

We've got over 80% of all of our team members engaging in some way with AI today. So it's a foundational capability that will, over time, I think, transform and improve much of what Woolworths' is capable of doing. We already use AI quite extensively in the business, working out the best promotional structure, how to roster people in the best manner, various other pricing dynamics and the way in which we measure customer response to points offers.

So there are a number of areas where AI is in place. I think we are in a very good position to, in a careful and considered way, benefit from AI. The data foundations and underpinnings of Woolworths are very, very strong and various AI partners that we speak to validate that for us. So we're just really thinking very carefully about how fast we go and that speed will accelerate. Those applications that can truly improve not only productivity but the customer experience.

If you go online and speak with Olive, our customer service agent, a bot online, it's all powered by AI. So I think you'll be hearing a lot more about AI going forward. We think it's got significant potential for the group, not just to make us more efficient, but to improve actually the work experience and satisfaction of our employees as well.

Chair, I have a question from shareholder, Roger Johns.

Just a quick I think -- a couple of things. We've got this beautiful reports up here. Before the meeting, could we actually have like an every day -- a day in the life of Woolworths Limited. So that shareholders can get some perspective, like we say, supply chain, why can we have some on the DC centers and the actual chain to the stores.

Going on the stores problem with the noise in that, in the U.K. they've studied noise. We've got -- I realized that it's not just that [indiscernible] store. There's other stores that have noise problems. It might be that with Woolworths who handle with the fleet contractors to actually establish some noise levels with these trucks? And also the refrigeration units with these trucks because in the U.K. and Europe, I think they've got standards for that, noise standards. Also on the supply -- on the DCs, do they actually -- does Woolworths actually use the rail transport industry for carrying any of their products?

Okay. Thank you, shareholder, for those questions. I think it's quite a good idea, the day in the life of. In the annual report, you'll see and also in the sustainability report is a decent chunk of that, which looks through our entire value chain, and I'd encourage you to have a look at that, but there might be something more in it.

In terms of noise levels, there absolutely are noise curfews that apply and restrict the time of truck arrivals. It's a sort of a commonplace regulatory threshold and standard that we must comply with. Thank you for those questions, shareholder.

Chair, I have a final question from shareholder, Natasha Lee.

Bring us home, Natasha.

Just very quickly, look, I'm a great fan of your rewards points as well. The only minor gripe about is that sometimes you have kind of vague wording like selected items, and it's very difficult to actually identify which items qualify for those bonus points. You have a little icon saying like, click for more details. But when I click it, all I get is a bigger picture of the things, so I can only identify the products in the photograph. So if you could work on that to actually kind of list the types of items, which qualify for those bonus points would be appreciated.

The other thing is on your kind of climate risk and stuff. There wasn't specifically anything about sort of perishability of the products. Now you talk about being fresh foods and stuff. Now obviously, with climate change, there is the potential for the shelf life or even in the transport of goods for it to be diminished because of the impacts of climate change. So I just thought you should address that explicitly.

Thank you, Natasha. We'll take away your wording point. Your point on temperature control, supply chain, the impact of climate change on produce is a very important one. We have undertaken studies -- early studies as to how various climate scenarios might change the face of Australian agriculture as to parts of the country that become more or less suitable for growing the produce protein that they currently do. So it's a very important point and one that we are quite alert to. So thank you very much.

Chair, I apologize. I do have one final question from shareholder, Roger Johns.

I think another thing with this -- I'd like to know if you actually embrace innovation because we talk about HI, I mean, AI, we've got HI in the human intelligence, and that's what we should be harvesting for some of the particular problems the company has got like the plastics problem, like wrapping around pallets and that. I think that really the company could have some kind of a notification, we're looking at solution to this problem and giving some inducements to some employees to offer these -- some innovative ideas to this.

And this would probably help along. Just one thing is we're in refrigerated. With the company's cloud in the refrigerated industry, we could even have it to the stage where the use by date is on the barcode. And that means that we're tracking the life of the product in there and also the use by date.

Great. Thank you very much for those questions, shareholder. I can assure you, actually, Woolworths is a highly innovative company, and that's just not what we think. We spend a lot of time with international retailers, have a lot of joint projects through a shared venture fund with 4 or 5 of the world's leading retailers. So there is a very active agenda and I think quite a proud track record of innovation.

Amanda, in her prior job, really oversaw the building of our entire digital and e-commerce business, which I think is widely seen to be the market leader here in terms of overall sales, but also just tracking through the various innovations that led to that growth.

In store, Rob McCartney is here. And if you wanted, shareholder, to go and speak to him about innovation, he'll have your ear for a couple of hours, I can assure you. We've got trolley innovation. Smart trolley is in trial at the moment. We've been trialing video technology in stores. I think we were one of the first retailers in the world to work with Everseen on video technology to try and prevent theft at checkout so that we understood when people were not declaring what was scanning, the technology depersonalized was identifying the items that were failing to be scanned.

And I could go on. So I think there's a rich history of innovation, a real culture to embrace it with a strong financial discipline as well because we don't want just all bright shiny things. They have to make a difference. That was a vote for you, Steve. So there we go. Thank you, shareholder. Are we ready to go on to online.

I apologize. I have 2 more questions.

Right. Okay.

Thank you. I'd like to invite up Julieanne Mills again from the Australian Shareholders' Association.

Immediately after the Federal Court decision on underpayments, you estimated that the cost of the company could be as much as $750 million pretax. This is not an insignificant amount and underpayments have been an ongoing issue for a number of years, now with significant payments already made. How and why does this miscalculation of pay occur? And yes.

Thank you, Julieanne for the question. As you'll be aware, all shareholders in 2019, we self-reported to the regulatory agencies that we had discovered an error in our payment system. And we set about very assiduously getting to the bottom of it. A huge amount of effort was done in understanding the root cause, remediating our systems, reporting publicly about it, and we have repaid almost everything that we believe we have owed to our employees.

And as of today, I don't believe we had a single employee complaint around that process. It was a monumental effort and one that I think actually ended up building quite a lot of trust with our employees just by the way in which we handled it, and I want to call out the work of our prior CEO, Brad Banducci, on this, championed now by Amanda and overseen by Karen Katz, our CPO, some quite extraordinary work done in that regard.

When the court decision came out a bit over a month ago, and I'm limited as to what I can say because it's a live piece of litigation. But I think the retail industry and certainly, we were genuinely surprised by elements of that decision that represented a significant departure from accepted practice in retail. And there are some quite detailed judgments that we made in remediating our employees on which we got external legal advice, obviously, that led to us completing that remediation process. Those legal judgments on interpretations of various clauses, including set off overtime, meal breaks has surprised the industry.

So there is a lot of water to go under the bridge on this topic. Because we have check-in, check-out data, and we capture that for our employees, we had no choice but to report the potential range of impacts from that preliminary court decision, which is what we reported to the stock exchange some period of time. But there was a lot of water to go under the bridge, and that's really all I can say on the topic.

Okay. So you don't actually have any further updates as far as...

Chairman, I have a question from shareholder [ Wolfgang Schwartz ].

Most of us who are Rewards members, once you shop and you swipe your card and then you pay with credit card. And once you get home within 10 minutes, you get site of an e-mail and tells you to buy this and this Woolies knows exactly what you bought every item and they send it in different offers.

So first is the question, when I joined this Rewards program a long time ago, you have our e-mails, our telephone number, our addresses, our name everything. How safe is our data with you seeing all the hacks that you have had, different companies experience. So what I have done lately, maybe I shouldn't do it, I just put $100 in I pay cash. It's anonymous. They don't know who I am, and I don't get the e-mails anymore, any offers either. But the question is basically the safety of the data that you hold from all those who are in the Rewards program.

It's a very good question, shareholder. So we, of course, invite our customers to opt into our loyalty scheme in order to provide that information and in order to receive the offers and all the benefits of that loyalty scheme. Rest assured, we take this issue incredibly seriously. And one of the core focuses of our IT regular updates, we had one yesterday in the Risk Committee that also focuses on cyber, and that also goes to the Board as well is the security of our customer data. It's absolute prime importance to us.

So when we think about where that data is stored, who has access to that data, the quality of the infrastructure that supports that data, how long we keep that data, we believe we have very good practice around the security of that, so much so that I would encourage you to take your Everyday Rewards card out and scan again. For the minimum period that we are required to, which I believe is 7 years. 7 years, I think it is.

Thank you, shareholder. If there are no more questions in the room, I'll turn online to questions.

Chair, I have a question from shareholder, Christopher Harkin. Recently traveled to Bendigo and went to BIG W Bendigo. It appears that the store has been recently updated. The store is bright and modern much better than the stores in Ballarat and Geelong well done to the Bendigo team. The map on the floor at the entrance is really helpful and should be repeated in other stores, will other stores be updated like the one in Bendigo?

So yes, thank you for the question, shareholder. And yes, we have been in a very careful way working with Dan and the team, upgrading our BIG W network. Of course, that is dependent on the financial returns. So we are pleased with some of the results from recent renewals, and you'd expect that those are sustained and we can generate the right returns that there will be continued renewal program within BIG W. But thank you for the observations. I'm sure Dan and the team will take that back.

Chair, I had a question from shareholder, Stephen Main. At the close of trade last night, Sigma, the owner of Chemist Warehouse, had a market capitalization of $35.6 billion, $2.7 billion more than Woolworths on $32.9 billion. Surely, it is time for the arcane restrictions on pharmacy to be lifted now that Chemist Warehouse has gained the system to reach a market share of close to 50%. What are we doing to lobby governments to allow more pharmacy products to be sold in our supermarkets? And does the CEO agree Chemist Warehouse has gained the system, taking substantial value away from the likes of Woolworths and Coles.

So I don't think we'll take this -- I think it's a very good question. There's quite a detailed obviously, response required to really get into the nitty-gritty of pharmacy regulation that is quite arcane in Australia and differs by state by state. Needless to say, we closely look at those regulations and consider whether we can compete. There is a real impediment for us to be able to do that just given the way the regulations are set up in pharmacy ownership. So I will take that question on notice. I don't know, Amanda, if you wanted to add anything to the question?

Look, I think I would just add and say that we recognize that the everyday need space and particularly personal care category has become increasingly competitive. That does mean that Woolworths too needs to become even more competitive in terms of our price and offer. We have an incredible advantage in the sense of the number of customers that do visit our stores each and every week. And so the way that we're thinking about it is how do we continue to improve our offer so that customers choose us first. Thank you.

Chair, I have a question from shareholder, Christopher [ Harke ] according to the annual report on Page 108, the current -- total current assets were only about 57% of total current liabilities. Had all inventories, $4.1 billion being sold on balance date and used to pay trade payables of $8 billion, the company would have had 0 stock but still owed around $4 billion for trade payables. What steps have the auditors taken to satisfy themselves that the current -- the coverage of current liabilities is sufficient? Can the Board explain how such a low coverage of current liabilities is appropriate? What steps are management taking to improve this situation?

Thank you for the question, shareholder. This is a common feature of supermarkets globally. This is a common feature of supermarkets globally. And it really reflects the very fast stock turn we have and our payment cycle. So us, like many, many supermarkets operate with negative working capital, which actually isn't a bad thing because the auditors, of course, consider solvency and our ability to meet our liabilities during the course of their audit report.

So there's no solvency question that's addressed through the audit and you get the comfort of that through the audit report. There's no mismanagement issue. That's simply the benefits of working in a business that has extremely fast stock turn where our payment terms to our suppliers enable us for the liabilities to exceed assets. So there's nothing really to be concerned about the shareholder. If you wanted to ask any more detailed questions in respect of industry practice, I would invite you to connect with Stephen Harrison, our CFO.

Chair, I have a question from stakeholder [ Blake Furman ]. Are lower shelf prices going to be reviewed? For example, in 2024, Woolworths Corned Beef was reduced to $8 per kilo from $10 per kilo, and now it is at $10 per kilo. Prior of price dropped winter. It was cheaper than current price. So is that product really a lower shelf price?

So lower shelf prices are proving to be a very important mechanic to showcase our price competitiveness and build trust with customers. So we absolutely need to deliver reliable, well-targeted, sustainable value to our customers. What the shareholder -- and it's a very good question. What the shareholder, I think, is referring to is we've been through also a period of significant inflation, really going through COVID. Thankfully, it's been tapering. And I think now we've had -- correct me if I'm wrong, Amanda, it might be 8 quarters, 7 quarters of reducing inflation over time. So these prices coming down.

Under the Grocery Code, of course, we need to, in good faith, consider supplier requests. If they're facing significant cost increases, then as we carefully consider those, we pass those on to customers with regret. So I think without knowing the specifics of the corned beef market, I am aware that during this period of time, there was significant price inflation in beef, and you probably have all seen that in supermarkets with the price of minced, for example, which probably explained that underlying movement in that intervening period. Thank you, shareholder.

Chair, I have a question from shareholder, [ Gee Do ], especially in the context of team simplification and cost saving as well as in light of the concern of being too corporate as having been raised in a previous question. What has been and will be implemented to manage workplace law risk such as the general protection contravention case lost to [ Ralph ] in 2022?

So as we -- thank you for the question, shareholder. As we implement any changes to our workplace and obviously, there are -- with simplification changes, what we're trying to do is to give people a greater sense of empowerment, enable better decisions to be made and make those decisions quicker. Any time that we are undertaking significant change in our workplace, we are, of course, very mindful of our obligations that we owe to our workforce under the various agreements and awards that govern those relationships. So they're all carefully considered in the context of making any of these changes. Thank you, shareholder.

Chair, I have a question from shareholder, Christopher Hakan, with joint shareholding with Stephen Hart. The new Woolworths store at Charlemont VIC is a positive contrast to some other stores in the Geelong and Southwest Victoria region. What are the company's plans to freshen up some of the older stores?

Thank you for the question, shareholder. Store renewals are a topic that are close to all of our heart. They transform the customer experience. They're great for the community. It creates a real buzz when Woolies reopens with new products and a better shopping experience. So we have been progressively renewing the entire fleet, and we're probably about 2/3 of the way through that.

But there's still more to do, and we do those to improve customer experience, but also to generate a good return. So while I can't comment on the particulars of the Geelong precinct and the renewal sequence there, I would offer the shareholder a connection with Rob McCartney, who can give additional color on the particular state of renewal plan in that area. Thank you for the question.

Chair, I have a question from shareholder, Blake Furman. Regarding speaker, it says that current and former team members can report issues involving code of conduct, et cetera. But recently, a former team member reported a big issue that happened but due to duration of events, it has been closed and the team member feels they have not been heard even though the team member has evidence.

So thank you for the question, shareholder. We take speaking up incredibly seriously. We have very, very strict legal liabilities around the speaking up process. We receive training as a Board about it, and I know that our teams take it very seriously. It's reported in detail to the Board. We understand speak-up trends. We understand the composition of various speak-up matters. We understand consequence management.

So I'm very surprised to hear that there would be a speak-up case where somebody doesn't feel that they have been heard. I would encourage that employee to resubmit a speak-up matter through the established channels we have, and I'm sure that will be considered. But that's certainly at odds with what we as a Board see and what we track with, I think, a fine degree of detail.

Chair, I have a question from a shareholder, Blake Furman. Due to safety issues that do occur within stores, teams are struggling due to demand, especially in fresh and online, not having enough team members to compete with the expectations within the in-store structure. With the in-store structure in line with rising demand be looked at again to make sure teams don't need to work unpaid periods, including management.

Thank you for the questions, shareholder. I can assure you that nobody is -- we understand our rosters. We understand check-in, check-out. We understand hourly pay. We understand best better off overall tests as it relates to grade and salaried employees, we take this very seriously. So any underpayment situation that, that might -- you might be indicating would be something that I would very much encourage you to communicate with Karen Katz or through speak up or directly to the Board or to Amanda. So there's no -- it should be no question on that.

We absolutely consider as part of annual budgeting, but more importantly, day-to-day trading rhythms, the way in which sales present themselves intra-week to make sure we've got the right amount of labor, the right team, the right time, the right task in our retail stores. There's nothing worse than getting -- as we do the whole time, a voice of customer score from a store which has had insufficient labor to actually make the store well presented and to deliver on our customer service promise. We're very incentivized to get labor at the right time, doing the right job.

So yes, we do reconsider it. Actually, it's a topic that Amanda and I have been talking about in respect of the peak summer trading. It's a specific topic. So I think the shareholder can rest assure that who might be an employee as well. I'm not sure, but that we will -- all of -- we are very aligned in our incentives to deliver the right amount of labor for the right customer outcome. We've invested a lot in the systems and processes that enable us to determine what -- when we should have labor in stores to match item demand and item velocity.

Chair, I have a final online question for this item from shareholder [ Eddie Go ]. As a shareholder for the last 30 years, I was wondering, is there any chance for the share price to go back to $40? Or are you saying, just keep on dreaming, where it stands now is really depressing?

I've got to be -- I'll have the lawyers all over the answer to this question. But given the question was, is there any chance to go back to $40, the answer, shareholder, is yes. We're very, very focused on that.

Thank you very much. There are no more questions in the room. I will now conclude discussion on Item 1. Thank you. I can confirm that the financial report and the report of the directors and external auditor for the year ended 29/2025, have now been received.

The next item of business is to consider the remuneration report, which is set out on Pages 80 to 103 of the 2025 Annual Report. This is an advisory resolution that gives shareholders the opportunity to provide feedback on the group's remuneration policies. The remuneration report sets out the details of the company's remuneration framework and the remuneration arrangements in place with the Directors, Managing Director and CEO and other key management personnel.

I now invite questions on Resolution 2. Are there any questions in the room? If there are no...

I apologize. I have a question from -- Julieanne Mills from the Australian Shareholders Association.

Thank you, Chair. The ASA would like to comment on why we decided to vote against your remuneration report. Essentially, it's due to the one-off accelerator incentives that were introduced in December. While these one-off payments may help motivate staff and encourage fast improvements, they arise largely from poor planning and oversight by the Board, including the reputational and operational consequences of prior decisions.

Importantly, shareholders were not asked to approve these payments. We appreciate it has been a tough year with many distractions and not all of that difficulty is down to the Board or management. However, executives should be compensated and incentivized within the parameters of existing shareholder approved remuneration policy. Can you please justify going beyond that policy by adding these extra payments?

Thank you for the question, Julieanne. Let us go back to December when this award was put in place. The clear feedback that we had from our shareholders and the clear mandate that Amanda brought to the Board and we totally supported was to invest quickly to restore momentum and sales trading and confidence, frankly, in the business that had emerged from a period of quite some significant operational and reputational disruption.

It was at a time where it was clear that other financial metrics in the STI were unlikely to vest. So what was put in place was a very targeted set quite modest to 150 people in the organization around some very specific things that we wanted to achieve in the next 6 months and the 12 months thereafter. One of which was the simplification program for the second half of the year to get that up and running and validated, and the team did a good job of that, moved very swiftly on it, and that was recognized in the Accelerator payout.

The other part of the Accelerator payout was H2 EBIT that was not reached. So overall, the Accelerator was complementary to STI, modest in size, well distributed and deep into the organization and reflected the very priorities that we were hearing both from our shareholders, but also -- and principally, from Amanda and the management team as to what was needed in the short term to really start to kick start the momentum. I know we had a detailed discussion on this when we met with yourself, and so I hope that adequately answers your question.

If there are no more questions in the room, I'll turn now to online questions.

I apologize, Chair. I have a question from a shareholder, Mr. Vincent.

Welcome shareholder, apologies cutting you off there.

I've been to a lot of annual general meetings, and this is the first one I've been to where you can't get a hard copy of the Annual Report. I'm just wondering if in the future, you could please make hard copies of the annual report available. It's fine for us to read them on the screen in our office, but when we come here, it's a little hard on the phone.

Yes. Sorry about that, shareholder, we'll get that sorted. There are no more questions in the room. I'll turn now to online questions.

Chair, I have a question from shareholder, Stephen Mayne. Thank you for offering a best practice hybrid AGM that could chair Scott Perkins, please explain why he doesn't do the same at Origin Energy, which he also chairs? Also, will you follow the lead of Qantas, Suncorp, Tabcorp, Stockland, ASX Group, Computershare, Myer and many other companies by disclosing how many of the 370,000 retail shareholders voted for and against this remuneration report item like at the scheme meeting?

This will make public Woolworths retail shareholder sentiment on issues like remuneration and forestry practices rather than having the voting results dominated by U.S.-based index funds and the likes of Australian Super. Such disclosure will also stimulate further retail shareholder participation. Last year, you rejected this request, why? You have the data, so please let the sunshine in on Australia's chronically low retail shareholder voting rights.

Right. Thank you, Stephen, for your question. On the first bit of it, I would invite you to direct those questions to Origin Energy. It's a Woolworths meeting. But -- so I'll leave you to do that. On the second question, I have to confess, we have not considered that point recently in the last 12 months. So I will take that on notice. I would encourage you to Dom Millgate, our Company Secretary, on your perspectives on it. And I assure you, we will consider that for the next AGM. I'm just really not that well equipped to answer that question. So please don't think I'm shirking it. Last year was a no. This year is -- let's properly consider the arguments. And furthermore, Stephen and I'll be more than happy to meet with you and discuss the pros and cons and get your perspective first hand.

Chair, I am showing no more online questions for this item.

Thank you. That concludes the discussion on Resolution 2. Thank you, ladies and gentlemen. If you have not yet lodged your vote for this item of this business, please do so now.

The proxies received for this resolution are now shown on the screen. I intend to vote all open proxies in favor of this item. A voting exclusion applies to this resolution as set out in the notice of meeting.

I will now move to the reelection of Board-endorsed Nonexecutive Directors, Jennifer Carr-Smith, Kathee Tesija as well as the election of Ken Meyer as a Board endorsed director. The process for nomination of directors standing for election and reelection involves an assessment by the Board of the relevant directors' skills, expertise and his or her performance and contribution to the Board during their term and in particular, over the last 12 months.

The results of this assessment form the basis of the Board's recommendation to shareholders. Having followed that process, the Board other than each candidate in respect of their own candidacy, unanimously recommends that shareholders vote in favor of the reelection of Jennifer and Kathee as well as the election of Ken to the Board of Woolworths Group.

I will start with Agenda Item 3A, the resolution to reelect Jennifer Carr-Smith as a Nonexecutive Director. Jennifer retires by rotation at this meeting and offers herself for reelection. Jennifer has served on the Board for over 6 years and has extensive experience and leading retail consumer businesses, including across the food and grocery sectors. She has a track record of building and scaling companies, disrupting incumbent businesses and online retail operating experience that both leverages digital, data and technology. Jennifer continues to provide a valuable contribution to the Board. Details of Jennifer's biographical information are set out in the notice of meeting.

Before turning to questions, I invite Jennifer to say a few words in relation to her reelection.

Thank you, Scott, and good afternoon, everybody. It has been a pleasure and a privilege for me to serve on the Woolworths Group Board for the past 6 years, and I appreciate the opportunity to present to you myself as a candidate for reelection. During my tenure, I'm proud to have worked with my fellow directors and the Woolworths' management team. I've been committed to ensuring that we evolve for the changing needs of our customers that we balance cost control for today, with investments for tomorrow. And we continue to support our team members through the many challenges in the retail environment.

I'm particularly proud of the work our sustainability committee has undertaken and the progress we have made across all topics on that agenda. This is leading the way for Australia, New Zealand and also across the globe. Looking ahead, we are at a pivotal moment for the company, and I look forward to working with my Board colleagues with Amanda with the executive team to develop and execute on our strategic agenda.

I commit to providing prudent guidance, oversight and ensuring that we stay true to our values, which make Woolworths Group such a strong and trusted organization. As a Nonexecutive Director, I bring 25 years of experience in retail, e-commerce and operations and have been a CEO and a COO in both large and small businesses.

I worked across the grocery and food sectors, including current board roles in agriculture, protein and dairy. As U.S. national, I also bring an international perspective to contribute to a variety of topics. Since retiring from my executive career, I've participated in Boards and currently, Woolworths Group is my primary commitment. I can assure you that I have the time, the capacity, the passion and the energy to continue to serve and meet my Board and committee obligations. And I thank you for your support for my reelection.

Thank you, Jennifer. I now invite questions on Resolution 3A. Are there any questions in the room? .

Chair, we have a question from shareholder, David Kingston.

My comments are in relation to all 3 of the directors being proposed for reelection. Look, we all look to see these of all 3 are excellent. So a great opportunity to draw upon those CVs. And we all understand the power of America. It has 5% of the world's population. It contributes 25% of the world's GDP, and it's got about 2/3 of the world's stock market capitalization. So how is that for disproportionate.

However, Chair, picking up on my issue earlier of is Woolworths at risk of becoming too corporate. It is surprising that the 3 excellent candidates up for election today are all American. I'm not sure whether they live here or live overseas. And I totally respect their excellent talent. And I totally respect the huge relevance of America to contribute trends to Australia and the benefit of it. It's just surprising Chair, that you're putting the 4 shareholders today, 3 Americans for reelection. I appreciate your thoughts on that. Thank you.

Thank you, shareholders, and thank you for the balanced way you raised that issue. If I am in -- with Walmart, with Loblaws, with H-E-B, with Tesco, with Ahold, with Carrefour, we could be having a discussion on rewards, own brand, promotional depth, in-store technology, adjacent businesses, retail has rapidly become a global game. And hence, the relationships that we have with global retailers, we get a lot out of it, and we also contribute a lot to it. That didn't really used to be the case.

So when it comes to making -- to adding directors to the Board who've got deep retail experience at scale because let's face it, there aren't a large number of at-scale retailers in Australia. We, of course, look to best practice overseas. And that best practice delivers, I think, has delivered to Woolworths' great insight over the years. So I think your question is quite reasonable. But I think the underlying reason why we as a Board and our shareholders, I think you'll see regardless as a positive, is that as retailers become more global, we are getting the best of the globe around the Woolworths Board.

Now balancing that, myself, Maxine, Phil, Warwick, Tracey are all residents here. So there is a strong local anchor to the Board to ensure we stay -- have our finger on the touch in terms of the local market nuances conditions that is so important to Woolworths' performance and future prospects. So thank you for the question.

Chair, I have a question from Julieanne Mills from the Australian Shareholders Association.

Thank you, Chair. I'd just like to support the same view as the previous speaker. But also, we would like to thank Holly for her contribution to the Board. And over the years, we've had a wonderful relationship with her and just appreciate the efforts. Holly has had a long history in the retail industry in Australia, and you are replacing her with Ken, who we're very excited by.

We appreciate his experience. But again, we also had that concern around having 3 American directors on the Board and actually understanding the -- having sort of people in the room that actually are in Australia and understand the nuances around the market. So that is a concern for us, especially given the rep track scores that you've had of late. So it's not really -- the question I suppose is, would you please consider replacing the next director with an Australian Director?

Thank you, Julieanne. I believe I've answered that question.

Chair, I have a question from shareholder, [ Bruce Bennett ].

Thank you. Chair. As a long-term shareholder, I'm very impressed with how the company is performing and having gone through a lot of the period of when we had to divest of the Endeavour Group and all the other things, which has been a very -- it's good now that we're focusing back on our core food and vegetables. But in terms of the directors, I just would like to know how do we ensure that directors' interests align with shareholders? And is there a minimum shareholding that the Board requires for directors to have to ensure that their interest to, in fact, align with those with other shareholders?

It's a very good question, shareholder. Thank you. And there absolutely is a minimum shareholding requirement that over time, we allow directors to build up to a period of time. They must hold 100% of their base fees in Woolworths stock. Thank you for the question.

If there are no more questions in the room, I'll turn now to online questions.

Chair, I have an online question that is more general in nature regarding AI, would you like it at this time?

Okay. Doesn't sound like a rem question, but I don't think it's going to be a better time. So let's do that.

Chair, this question comes from shareholder, [ Xidu ]. Given the application of AI in online advertisement, pricing and sales, and there have been public issues regarding promotion practices. Have there been any efforts, initiatives, measures or plans about AI safety? By AI safety, I mean the possibility that an AI system itself might make bad decisions. For example, if an AI is in control of pricing and/or specials, setting prices or promotions.

Thank you for the question. It builds on the answer I gave to the earlier shareholder question, which is more broadly directed at AI. So absolutely considerations around AI security. The data that is or isn't shared with the AI agent, AI LLMs that we might be using, how AI manifests itself in terms of practical customer advice are very front of mind. So I think the shareholders' question is a completely fair one and certainly forms part of our AI deliberations.

Chair, there are no further online questions for this item.

Thank you. That concludes discussion on Resolution 3A. Thank you, ladies and gentlemen. If you've not yet lodged your vote for this item of business, please do so now.

The proxies received for this resolution are now shown on the screen. I intend to vote all open proxies in favor of this item.

I'll now move to agenda Item 3(b), the resolution to reelect Kathee Tesija as a Nonexecutive Director. Kathee retires by rotation at this meeting and offers herself for reelection. Kathee has served on the Board since 2016 and has extensive retail experience in the U.S. market. Her international insights into consumer behavior across retail markets, practical operating experience leading the merchandising and supply chain functions for a very large international retailer and an understanding of strategy, digital and data has enabled her to continue to make a valuable contribution to the Board. Details of Kathee's biographical information are set out in the notice of meeting.

Before turning to questions, I invite Kathee to say a few words in her best Australian accent in relation to her reelection.

Thank you, Scott, and you're not going to like my Australian accent. Good afternoon, everyone. I am seeking your support for reelection to the Woolworths' Board, and I want to share why I believe my experience and my passion make me the right person to help guide the company forward. My executive experience spans over 3 decades at U.S.-based Target Corporation. I've lived and breathed retail from many different angles, leading commercial teams across stores and digital platforms, overseeing sourcing, product design and development and supply chain as well as merchandising operations, but more than the operational expertise. What drives me is something really fundamental, truly understanding what consumers and customers want and need, then delivering shopping experiences that meet them where they are.

We all know the reality that Woolworths Group has faced significant challenges these past few years. But I've seen firsthand that challenges are also opportunities for transformation. What matters now is our commitment to improvement and I'm absolutely committed to that work alongside this Board and management team. The retail landscape is evolving rapidly, including changes in consumer behavior and expectations regarding value and convenience.

The balance between physical and digital experiences aren't just trends, they are foundations for our future success. This is where my passion lies, translating consumer insights into tangible value and real convenience for our customers. Woolworths Group serves millions of Australians and New Zealanders every week. This is both a privilege and a responsibility. With your support, I'm ready to continue bringing my experience, my customer-first perspective and my unwavering commitment to creating value for our customers and shareholders. Thank you for your consideration.

Thank you, Kathee. I now invite questions on Resolution 3(b) Are there any questions in the room. If there are no questions in the room at this time, I'll turn to online questions.

Chair, there are no online questions for this item.

That concludes discussion on Resolution 3(b). Thank you, ladies and gentlemen. If you've not yet lodged your vote for this item of business, please do so now.

The proxies received for this resolution are now shown on the screen. I intend to vote all open proxies in favor of this item. I will now move to agenda Item 3(c), the resolution to elect Ken Meyer as a Nonexecutive Director.

Ken was appointed as a director on 1 October 2025 and accordingly seeks election by shareholders under the ASX listing rules and the company's constitution. Ken brings extensive food retail experience to the Board having spent 24 years at Whole Foods Market, a U.S.-based grocery chain known for its high-quality fresh food, in-store experience and customer service. He played a key role in the growth of Whole Foods to more than 500 stores across the U.S. and U.K. and its eventual sale to Amazon. The Board considers Ken's extensive experience in food and grocery retail including leadership and retail operations, supply chain and fresh food innovation, aligns with the Board's focus on retail excellence and fresh food and further strengthens the mix of skills and experience on the board.

Detail of Ken's biographical information is set out in the notice of meeting. Before turning to questions, I invite Ken to say a few words in relation to his election.

Thank you, Scott, and good morning, everyone. It's great to be here. I do not have an Australian accent, but I am very passionate about learning about everything Australia. So it's an honor to be nominated to the Board of Woolworths Group. I'm deeply grateful for the confidence placed in me and for the opportunity to contribute to one of Australia's most enduring companies. Woolworths is currently at an exciting inflection point, continuing to lead fresh foods, strengthening its omnichannel presence, deepening sustainability commitments and ensuring supply chain resilience in an evolving retail environment.

My own career, dedicated to food retail and innovation, I spent 24 years at Whole Foods Market, ultimately serving as Executive Vice President of Operations of North America and the U.K. During that time, I helped drive the company's expansion in fresh food innovation and the integration with Amazon, gaining a deep understanding of operations, culture, customer experience all intersecting to create long-term value.

As an executive partner of Shore Capital, I continue to work with management teams across the food and beverage sector, guiding growth, transforming digital in operational excellence. I also have cofounded Primo Fair, which works with international food brands entering new markets, reflecting my passion to connecting consumers to quality and innovation.

I believe this combination of operational experience, investment insight, international experience and perspective aligns closely with Woolworth's strategy and enduring purpose. I look forward to supporting the Board and management as we build the group's strong foundations to deliver sustainable growth, community impact and long-term shareholder value.

Thank you very much. And by the way, I typically, wear a tie once a year for shareholder meetings. So in my life, it's been a very much different casual environmental address. So just as a side note, sir. Thank you.

Thank you, Ken. I now invite questions on Resolution 3(c).

Chair, we have a question from David Kingston.

Thank you. It may be a challenging question, Ken, because you're the new person, but sometimes the new person can look at things objectively without any historical connection. But look, we're all concerned about BIG W. It's had a write-down this year impairment of $346 million, it's been a laggard for many years. There have been chronic excuses coming out periodically. The annual report and the presentation talk about it's going to migrate to more an e-commerce platform.

Again, I'd just be interested in your views as the newcomer as to Americans are known for being fairly clinical, perform or cut. Just on your views about whether BIG W is worthwhile continuing with clearly in that space. Kmart is shooting the lights out. Target struggling. The Chinese sites are doing very well. It's very competitive. So I'm not particularly critical. It's just in a difficult space. But I just hear every year, excuses about Kmart, about BIG W, and is it time to take the axe to it?

Thank you, shareholder. I think it's entirely unfair to ask Ken to comment on that, having just arrived at the Board. And given this is -- this resolution is about his election, I will extend the courtesy of you to respond just with the restatement of the Board's view which Ken, of course, has started to contribute to, but I don't think it's appropriate that we throw him in the deep end right in front of everybody now having just arrived.

There's no question that your diagnosis on BIG W's performance is right. So category by category, we have been working through BIG W's performance with Dan and the team, strengthening the team around him and category by category, we are starting to see improvement. The critical category to get right has been clothing, and we're seeing some early and pleasing momentum in that category, which Amanda spoke to, we saw in the Q1 sales.

We've also got, I think, a home category that's starting to perform better, and we're seeing that in customer numbers and sales, and we've got a long-standing presence as I think Australia's largest bookseller, the largest retailer of Lego and a well-established capability in play for that part of the business to keep performing. The area that needs most urgent work is the everyday category, that everyday category is obviously, we're spending a lot of time on getting the customer proposition right there, and we do think that BIG W can play an important role in everyday, in particular, for bulkier items whether it be in pet food, everyday cleaning needs, dishwashing, et cetera.

So you'll hear more on BIG W's performance going forward, and I can assure you, shareholder, we're not at all defensive to the challenge. There are no more questions in the room, I'll turn now to online questions.

Chair, there are no online questions.

That concludes the discussion on Resolution 3(c). And thank you, ladies and gentlemen. If you've not yet lodged your vote for this item of business, please do so now. The proxies received for this resolution are now shown on the screen. I intend to vote all open proxies in favor of this item.

The next item of business is seeking general shareholder approval for a grant of LTI rights to Amanda Bardwell as Managing Director and CEO for financial year 2026. The proposed FY '26 LTI grant to Amanda is 117,024 performance share rights. I'd like to stress that Amanda will only receive the maximum value of this award if our performance metrics are exceeded over the 3-year period to financial year 2028. Details of those performance metrics and the other key items, key terms of performance share rights, including a voting exclusion, which applies to this resolution is set out in the notice of meeting.

I now invite questions on Resolution 4. If there are no questions on the room on resolution 4, I'll turn now to online questions.

Chair, there are no online questions.

That concludes the discussion on Resolution 4. If you have not yet lodged your vote for this item of business, please do so now. The proxies received for this resolution are now shown on the screen. I intend to vote all open proxies in favor of this item. A voting exclusion applies to this resolution is set out in the notice of meeting.

I will now move on to the next item of business. The next item of business relates to resolutions requisitioned by a group of shareholders. Resolutions 5(a) to 5(c) were requisitioned by a group of shareholders holding approximately 0.004% of Woolworths Group shares under Section 249N of the Corporations Act.

Resolution 5(a) seeks an amendment to the Woolworths Group constitution. Resolution 5(b) and 5(c) are contingent advisory resolutions that will only be put to the meeting if 75% or more of the votes cast by shareholders entitled to vote on Resolution 5(a) are in favor of the resolution.

Resolution 5(a), 5(d) and 5(e) were requisitioned by a group of shareholders holding approximately 0.005% of Woolworths Group shares under Section 249N of the Corporations Act. It is the Board's intention to allow shareholders as a whole a reasonable opportunity to ask questions on each of the resolutions 5(a) through 5(e), even if Resolution 5(a) is not passed by the requisite majority, and resolutions 5(b) through to 5(e) are ultimately not put to the meeting.

I will now turn to Item 5(a). The proposed amendment is intended to insert a new provision into the company's constitution, which would enable shareholders by ordinary resolution to express an opinion or request information about the way in which a power of the company vested in the directors has been or should be exercised. The Board respects the rights of shareholders to express an opinion or to engage in dialogue with the company, and we see that here today.

The Board further acknowledges the rights of shareholders to request the requisition to resolution, which seeks to amend the company's constitution. The Board firmly supports the engagement with Woolworths Group shareholders and stakeholders and the group has in place a number of avenues available to these parties to express their opinions about the management of the company.

Woolworths Group has extensive dialogue and interaction with shareholders and stakeholders and consider their views in the preparation of our strategy and plans. The directors, therefore, do not believe that the amendments contemplated by this resolution is required for shareholders to be heard and to express opinions about the management of the company. The Board also recognizes the importance of addressing the issues raised in the requisition resolutions.

For these reasons, as further detailed in our notice Of meeting, the Board does not consider changing the constitution to be in the best interest of the company. Consequently, the directors recommend that shareholders vote against Resolution 5(a).

As the item relates to the amendment of the constitution, a special resolution is required in order for the resolution to be passed. That means at least 75% of the votes cast must be in favor. The matter is now open for comments and questions. Are there any questions in the room?

Chair, we have a question from [ Jeff Cussons ].

Thank you, Chair. I would like to speak to these resolutions as a group rather than to take them one by one with your agreement because the issue that arises from all of these resolutions is one of reputation and risk. That is the issue at hand here. And I don't know whether shareholders are aware that the current reputation of this corporation since last of all corporations measured in Australia used to be well up the reputation index, but it's now absolutely at the bottom.

I don't know if people were aware of that. But you would note Chair that global research indicates that about 1/3 of all shareholder value is attributed to reputation 1/3 of all shareholder value. So when we strike these sorts of issues, we're not just talking about insignificant things. We're talking about the wealth of all these people in the room and all these people who are listening. So you have a current reputation right at the bottom. Some of these resolutions might help you to improve that reputation. For instance, there's one there that says no more and no less that Woolworths should adopt one of the world's best practice measures for its sustainable sourcing policy. That's all it says.

The response from the Board was, no, vote against that. Now you've mentioned best practice many times in your answers to all kinds of questions today. But when it comes to this issue, you say vote against it. How extraordinary, that a Board that's trying to lift itself up off the floor advises its shareholders to vote against a resolution that might improve its reputation.

And then your practices in the marketplace. A lot of these resolutions relate to Tasmanian salmon and the very endangered species in Macquarie Harbour, the Maugean skate, but they come back to reputation because on all your packs of Tasmanian salmon, you say on every one of them on the own brand packs, all Woolworths' Tasmanian salmon is sustainably sourced or I think you used the term responsibly sourced. Now your competitor, Coles, used to put that on their packs, but they don't anymore.

They don't anymore, not Coles. They took it off because they say, hells***, that we would try to suggest that these products are sustainably sourced. The World Wildlife Fund, who used to put their brand on Tasmanian salmon, they took it off quite a long time ago. The RSPCA, the leading animal welfare organization in this country has now taken their brand off, but not Woolworths. That's looking after reputation. That's looking after shareholder value. I think not.

Imagine, sir, under your leadership of this company, if there is another fishkill in Macquarie Harbour of around 1 million kilos as there was, which is very likely because the water in Macquarie Harbour is getting warmer at about 3 or 4x the global rate, and those fish don't live in that water. And imagine if all these groups who are here today who are interested in this matter have got drones flying all over that fishkill, and they see the salmon producers scooping up the dead and diseased fish and putting it along with the live fish into the packs of Woolworths responsibly sourced salmon, and that is what they do, as I hope you know because the industry itself has said that's what they do. It's not me saying that.

That's what the salmon industry say they do. I don't know everybody knew that, but you buy Woolworths own brand salmon, and it's got in it the diseased and dead fish along with the good and live ones. And I think it was the CEO, wasn't it, of the leading salmon organization in Tasmania, who said, yes, that's true. That's normal practice or something like that. He said. Now I give you a quote not from an environmental group or a grain group, but from Forbes, the leading business magazine, normally supports business.

But that's -- this is what they said about Woolworths in this issue. They said, "For investors, this is about valuation and trust. If the company fails to act on a well-documented biodiversity risk, how can shareholders have confidence in its management of less visible risks across complex supply chains." It's a pretty darn good question, Chairman. I think we'd all like to hear the answer to it.

I spoke to your predecessor, Gordon Cairns some years ago about this. We had a long phone conversation. And he said to me, we're looking into it. We're going to do something about it. Let's hear what it is, Chairman. I think everyone here would like to know. Thank you.

Thank you very much, shareholder. So you've covered, as you indicated in your response, all of the resolutions at once. I don't -- I'm going to respond in detail to each of these resolutions as they go by, but I will address the issue of reputation.

The shareholder is absolutely right. Woolworths reputation is not where it used to be, not where it needs to be. It happens to be one of the key metrics in the long-term incentive for all of our management. We are quite unique where a very small number of Australian companies actually focus on rebuilding reputation and link it directly to remuneration outcomes. So the question is what drives reputation, and what actions should we take in order to drive reputation over the long run?

In my answers to the questions that -- the resolutions that are about to be put before us, I will also respond through the lens of reputation as to why we have undertaken the decisions we have at this point in time. So I will come back to the core point that you've raised. But what I don't want to do now is to repeat all of the detailed answers that we will give to the resolutions in advance of them being put by others. I will come back to the point.

Yes. However, they are all grouped together, as I think you know, and they all go back to the fundamental marketing proposition that Woolworths puts out. And marketing is something I do know a little about, as you may be aware. So you don't market, we're the lowest price group. You don't market we have the widest range. We're the fresh food people. So please address this issue rather than trying to divert it into and carve it up into little areas. If those events occur on your watch, how can you sustain the fundamental marketing proposition of the fresh food people? Why do you put your entire marketing program and the reputation of your company, they're both linked. Why do you put that at risk? I know a couple of the directors sitting up on that stage. I've worked with them before. I can't believe a Board of Directors that you do not deal with these risks when other people at least have started and Woolworths is just seems to be in the bunker and the Board is saying, we run this company. We're not going to listen to anyone. We'll do what we want to do. That seems to be the attitude. And in my long business career, I've seen boards do that before. It never ends well. I would like a response to that.

So Mr. [indiscernible], I couldn't -- frankly, I just couldn't disagree with you more that this Board is not thinking very carefully about the issues that are in that. Well, I'm going to actually address your question. And the reason why I proposed to address this separately is, I believe there are a number of shareholders who want to speak on that, not just you, sir. So by giving them the opportunity to speak later on, I was going to address in detail. But I will rise to the occasion and I'll address all the resolutions in one. And hopefully, at the end of that explanation, you understand the quite difficult judgments that we face in respect of the particular resolutions that we've been put. And you can also ask further questions as to whether you think that we have been asking the right questions. Before I do that, I want to ask see if there are any other questions in respect of 5A, which is the change to the constitution. If there are no more questions on that, I will now turn to questions online.

Chair, I have a question from shareholder, Stephen Mayne. At last year's AGM, 30.4% of directed proxies supported a shareholder resolution on salmon farming practices, which the Board opposed, yet you dismissively stated in the notice of meeting that the resolution was proposed by the owners of just 0.004% of the company, something you have done again this year. How impactful was this big shareholder protest vote last year? And have there been any similar protest on any of this year's shareholder resolutions? Did any of the proxy advisers recommend a vote in favor?

I also don't understand your opposition to a constitutional amendment to allow for opinion-based shareholder resolutions. Why not voluntarily amend the constitution at next year's AGM to elapse these, but only from shareholders speaking for more than 5% of issued capital, similar to the voting power required to call an EGM.

So thank you for the question, shareholder. You'll see shortly we'll display all the votes as they've fallen for each of the resolutions, including the ones that were 5A not to be passed, we wouldn't have been required to put to the meeting. So we're going to be very transparent around that. As is normal practice, we are required, I think, under the Corps Act, when we talk about the people who have requisitioned these resolutions to refer to the quantum of shareholding they make. Mr. Mayne's point is a perfectly valid one. There might be lots of shareholders who had a small number of shares have made that point. So I don't shy away from that. And I think going forward, I'm actually more than comfortable to refer to the numbers of shareholders I don't think that's a significant issue at all.

What is a significant issue is the substance of 5A. So the Corporations Act, our constitution and common law have a very prescribed series of occasions where shareholders advise the company through a vote, and we're seeing that today. Certain things are put to an Annual General Meeting for a vote. There is no notion under Corporations Act or our constitution for well-meaning shareholders pursuing whatever passion project they might have to venture into the company and require management to do certain things. to report on something. And you could, I think, predict the sort of floodgates that might be opened by that approach. This is not the right occasion to debate this issue. This is a law reform issue that goes to the heart of the Corporations Act and to ASX constitutions. So we would welcome that debate, but we don't think that Woolworths' Annual General Meeting and these requisitions should be -- is the appropriate forum to debate what would be a fundamental change to corporate governance in Australia. And that is clearly the voice from our shareholders as well, and you'll see that shortly in the proxies as they come up. Are there any other questions online?

Chair, I have a question from shareholder, Blake Fuhrmann. Regarding the Board's recommendation of going against this amendment of constitution, wouldn't it be better if shareholders had more of an impact of opinion of businesses management to have a more open perspective of everyday living experiences and to have more transparency between business and consumers to rebuild the trust that is currently lost.

Thank you, shareholder, for the question. As I think I outlined, and I think it's genuinely the case, we are open to our shareholders -- we're open to answering your questions. We have -- we dedicate a huge amount of resource during the course of the year to meeting with shareholders. We -- meet with proxy holders. We meet with NGOs, we meet with interested parties. So I don't think there's any evidence of this Board not being open to engagement.

Just yesterday, shareholder, this entire Board disappeared into a store and did a shop with a customer. shop alongside a customer and a value-oriented store, so we personally could be reminded of those issues that those customers were facing as they solve their budgetary needs. We all work together, we were all alongside different customers, all from different walks of life, trying to solve their budgetary needs and how Woolworths could actually do an even better job. So we're very acutely aware of the need to stay close to customers at this point in time.

Chair, there are no further online questions.

That concludes the discussion on this item. Thank you, ladies and gentlemen. The proxies received for Resolution 5A, B, C and D are now shown on the screen. As I mentioned earlier, Resolution 5A is a special resolution and will only pass if more than 75% of the votes cast are in favor. I intend to vote all open proxies against this item. If you have not yet lodged your vote for this item of business, please do so now. Based on the proxy instructions received and votes represented today, 75% of the votes have not been cast in favor. And accordingly, the proposed amendments to the constitution have not been passed.

As such, resolutions 5B through 5E will not be put to the meeting. As I said earlier, we welcome shareholder debate and feedback, so I will allow a reasonable opportunity for shareholders to ask any further questions on resolutions 5B through to 5E. I will also remind shareholders to consider if their questions have been effectively been answered in prior discussion. I now invite questions on 5B and 5B. But before doing that, I pledge to Mr. Cousins, that I would address in aggregate, all of these as one item. I do appreciate that might lead to repetition, but I hope that this will -- maybe will answer some of the questions that might be in the queue behind Mr. Cousins.

So let me first turn to the issue of salmon in Macquarie Harbour. I want to make it very clear that Woolworths salmon procured from Macquarie Harbour. Woolworths salmon or seafood procured from anywhere must be sustainable. If it's not sustainable, we won't sell it. So the question is how we come to that judgment and what evidence that we consider. And we must, of course, adopt a principle-based approach. In the last 12 months, there has been new information on the state of Macquarie Harbour and the fundamental issue at hand, which is the endangered status of the Maugean skate. That new information has been, firstly, information from the University of Tasmania from the Department of Marine and Antarctic studies, which indicated that Maugean skate population have recovered to a level not seen for more than a decade. That evidence indicated improvements in oxygenation levels in Macquarie Harbour.

Since then, we have also seen the government come out firmly in support of the industry and doing what they can do to support salmon farming in Tasmania and in Macquarie Harbour. Furthermore, there are 3 agencies, independent expert agencies that provide certification to our suppliers in respect of product sourced from Macquarie Harbour and Tasmania. Two of those certifying authorities, BAP and GLOBALG.A.P., continue to certify seafood from Tasmania as sustainable.

The third certifying agency, ASC, has launched a new standard in May this year that we think looks like best practice, and we are now working with all of our suppliers to see whether they can also rise to the standard of that certification as well. So we have 2 independent bodies who certify our product out of Macquarie Harbour as sustainable, and we'd like to see a third.

Furthermore, the Tasmanian government has announced in recent days another independent expert inquiry into the state of the industry in Tasmania and its sustainability aspirations and what can be done to further improve them. So we have improving science from an independent agency. We have the government determined to do what it can to support that industry. We have 2 certifying authorities and potentially a third working with all of our suppliers. And we have a government report inquiry commenced in recent days.

In that context, ladies and gentlemen, we did not think it was the right thing to do to resolve from the sustainability credentials and certification of seafood sourced from Macquarie Harbour and from Tasmania more generally. However, if the evidence changes, so too will our position. This is not a crusade by Woolworths. We make these decisions very carefully, and we take into account all of those factors. And we also take into account the livelihoods of our suppliers and the local communities and the customers who enjoy and rely on that product. But first and foremost, we'll be guided by the science and the certifying bodies. And if we're not satisfied that, that seafood is sustainable, we will withdraw the nomination.

You would be well aware that the certifications you rely on are largely driven by the salmon industry. The best one is the ASC. You don't use that. There is also complete illogic in your comments regarding the recovery of Macquarie Harbour, as you put it. There's a lot of scientific debate about that. But even if there wasn't, Woolworths' policy when the Maugean skate hadn't recovered was still to support salmon farming. So why do you rely on the concept? There's no logic in what you have said at all, and there will be scientific contest to what you said. But even if there wasn't, your policy when it was the most endangered and one of the rarest secretes on this planet was still to carry on as you are right now. So there's not a word of truth in what you've just said, Chairman, I'm sorry, but I have to put it that way.

Well, I have to correct you, Mr. Cousins. Unfortunately, I have to correct you.

Right. Please go ahead.

So the first comment you made is that we have no interest in ASC.

I'm sorry, but you don't use it.

We don't...

And then when it's suggested, you might use one of the world's best practice standards, you say to all the people in this room and all the people listening, don't vote for that. We don't want to be best practice. Coles have taken their, they've removed their labels like that from their salmon because they know it's ludicrous. Something to say it's responsibly sourced, but you don't do that.

Sir I do want to correct the allegation. We do take ASC seriously. We have been talking to ASC. And as I explained to everybody in the room, we are working with a new standard as of a couple of months ago. We are working with our suppliers to see if they can meet that standard, and that is what we would like to happen. Which would leave us...

Gordon Cairns -- exactly what Gordon Cairns, your predecessor said to me directly on the phone 3 or 4 years ago, 3 or 4 years ago, and you are still considering it.

No, that's not the case, sir. Sorry. We are considering the application of a new standard devised and publicized in May. We're working with our suppliers to that standard. We hope to get 2 of them, we think, done maybe by the end of the year. That will leave 3 certifying agencies certifying Macquarie Harbour. That's what I said.

All right, Chairman. Well, I just say this to you. This is the first time in my 50 years of being in business that I've ever spoken from the floor. I've spoken on that stage as a Chairman, and I've spoken at some of -- I Chaired the merger meeting of probably the biggest merger in Australian history at that time, but I've never ever spoken from the floor before. I do it today because I think this Board is completely misguided and is doing the wrong thing about its shareholders and its customers. Thank you.

Thank you, Mr. Cousins, for expressing your views. I can assure you, again, shareholders and all customers listening, if Woolworths isn't completely satisfied on the sustainability of seafood Macquarie Harbour, we will withdraw that nomination. We carefully consider the evidence before us. We engage with all the NGOs and those who've got a passionate belief in it, and we respect that. and we will report in a very transparent way going forward on the status of that. But at this point, with improving science that we rely upon the experts for validating authorities, government policy and independent review, now is not the time.

Mr. Cousins, I think I also pledged to consider some of the other generalized resolutions. Would you still like me to do that? O would you like others to have a chance to ask a question?

No, I think I've had my [indiscernible]

Good for you. Thank you very much, sir. Are there any other questions in the room in respect of these resolutions?

Chair we have a question from Dr. Leonard Guerra.

Good afternoon, Board, and thank you, Chair, for the opportunity to speak. I'm Dr. Leonard [indiscernible] scientist with specific expertise in their biology and fishery management. I currently work with the Australian Marine Conservation Society. Now Chair, I'm sorry to say this, but you say that the population has recovered. That is actually incorrect and consequently, very much risks misleading your shareholders.

Firstly, and you mentioned that Woolworths, and I'm pleased to hear this, that will follow and be guided by evidence as it comes to hand. So on that note, I implore that the Board consider the case that I put forward based on the evidence and this evidence coming from the very report from the University of Tasmania that you quote. There are some critically important caveats when interpreting the population estimates, this is the Maugean skate, everyone, reaching 2014 levels, caveats with which the authors of the University of Tasmania report described themselves.

First, it's biologically implausible that the relative abundance of Maugean skate has increased by 425% from 2022 to 2024, given that the natural rate of increase for their population per annum is no more than 8.8%. The IMS report does not claim population trends as "significant" increase in terms of the magnitude of change, only that there are statistically significant differences reflected in the catchability. So this is the CPUE they use to measure relative abundance since 2022.

Second, 2014 population levels reflect a heavily impacted population, which have been on a seat decline since 2008 and was yet to be wiped out by an estimated 47% in 2019.

Third, despite tentative signs of juvenile recruitment in Maugean skate in 2022, small animals were not caught in 2024, suggesting that recruitment may not have continued. Assuming that any of these juveniles do, in fact, survive from 2022 to reproductive age, so a reproductive age is around about 4 to 6 years old. And when we look at females in particular, the earliest this would occur is in 2026.

Fourth, the majority of females captured in 2024 were adults nearing the end of their lives. So I repeat, the majority of females captured in 2024 were adults nearing the end of their natural lives, of which an estimated maximum age is around about 10 years old. So with the information I present before you and noting that the very definition of endangered is a very high extinction risk, this remains and the scientific evidence to date does not preclude the necessity for a precautionary approach to actions. Thus my question to the Board, from this day 4, how will Woolworths apply the precautionary principle to sourcing salmon from Macquarie Harbour?

Thank you, shareholder, for your question. I totally respect your domain expertise and passion for this topic. How -- clearly, so I'm not well equipped to engage in a debate around the science on this. We do rely on independent experts. We rely on the conclusions of those scientific studies. But as you rightly point out, there are, of course, going to be risks and judgments that go into that, which is why Again, this is not -- we're not -- despite what others might think, we haven't got our head in the sand on this issue. And if the evidence -- we believe the evidence suggests that change is warranted, we will change. What I would like to do, sir, is to connect you with our sustainability people so you can share your own opinion because clearly, you've got a lot of domain expertise. We do rely on the University of Tasmania in their department. We rely on -- we've had an independent expert review that as well. We rely on the certifying agencies, but you've clearly got an informed perspective, and there's no reason why you shouldn't have access to the best people from our team to be able to share that.

Thank you sir. And honestly, this is not my opinion [indiscernible]

Chair, we now have a question from proxy holder, Jess Colin.

I've traveled here from Tasmania. I live on the Huon River, and I represent communities. 7 out of 10 Australian Tasmanians surveyed would like to see farmed salmon industry moved out of our inshore sheltered and biodiverse waterways. And also, please do not call me passionate because I'm here representing an entire community of people, and I'm talking to an issue that is very, very serious in our waterways.

I'm a mother. I have 2 teenage children. One has grave fears about extinction and the other has become numb to the fact that for many species, extinction is inevitable. I'm concerned about the position that you on the Board appear to take, Woolworths is promoted as the fresh food people. And I ask you, were you selling diseased salmon labeled as responsible last summer when millions of fish died from disease and balls of prichard fat were washing up on our beaches.

I can guarantee you the residents of Bondi would not have thought that was okay. Salmon Tasmania CEO, Luke Martin, conceded in the media that it was standard practice to harvest diseased salmon for human consumption. And the Tasmanian government disclosed that all lices in Tasmania Southeast were infected with Rickettsia salmonis bacteria, resulting in the Piscirickettsia disease. It's likely that you were selling it and even continue to be.

During this outbreak, industry was caught on camera treating their livestock so rigidly that RSPCA withdrew all endorsement of any farm in the Tasmanian salmon industry. RSPCA have never endorsed salmon farming in Macquarie Harbour due to animal welfare concerns and poor water quality. Last summer, over a ton of antibiotics was dumped directly into our waterway near my home to treat infected fish. The salmon too sick to eat died anyway. And the antibiotic oxytetracycline was found for weeks afterwards in the bodies of our wild fish. This is not responsible management.

The industry is currently applying for increased permits to -- emergency permits to continue using even more antibiotic. And recent documents have just been released to the media that they have been seeking government advice on how to get out of federal governance regulation in order to use this antibiotic off-label. It's not responsible. If this kind of farming irresponsibility were carried out on a cattle farm, sheep farm or any other livestock farm, it would not be tolerated because it's irresponsible. What is happening to the Maugean skate in Macquarie Harbour is irresponsible, yet you continue to label it as responsible. The fresh food people have a lot to answer for when it comes to these sick fish, which are threatening the extinction of a living dinosaur. Are you going to act and carry out your due diligence as your counterpart at Coles has done and remove these labels? Do you sell diseased salmon? Is that something that you look into and you make sure you're doing your due diligence for your customers on? Or have you, the Board of Woolworths, simply resigned yourself to complicity in the potential erasure of species in your unwavering support of this industry in the face of the evidence that has been provided before you through meetings with your Board and through shareholder questions.

Will you discontinue the sale of salmon farmed in Tasmania as responsibly sourced? And I also want to add just to address the answer that you gave before, the review of the industry that the Tasmanian government has promised is not going to be a review. It is going to be a study. And in the terms of reference that were published just the other day, the government made it very clear that there were to be no recommendations put forward by that study. No recommendations for improvement are going to be picked up by the government or industry as part of that study.

Thank you, shareholder, for posing the question. I want to avoid repeating myself, but I also want to address some specific aspects of your question. I think in the prior -- my prior answer, I've addressed why we continue to have an extreme degree of vigilance at the Board level and our sustainability team. I know it's something that Amanda spends a lot of time on personally that the judgment call that we have made in this regard. And again, for the record, we are not -- this is not a crusade. This is not blind support of the industry. We believe we are making a principal decision. And if we think that the evidence changes, we can't get certification, then we will withdraw sustainability from the salmon source from Tasmania.

In respect of the infection event that you rightly point to, I thought it was very distressing. We saw images of it. We immediately spoke with the regulator. We spoke with the supplier. The regulator investigated the company. I understand that there have been remediation undertaken and that there are no outstanding matters as it relates to that supplier. In respect of the infection itself, and again, you sound like you're much more of a domain expert than I am, but we do spend time on this. Also, we understand from our independent expert, as it is with a lot of large-scale agriculture that you will have bacterial events in all forms of agriculture and that this bacteria is endemic to Tasmania and...

It is now considered endemic. It was not up until a few months ago. It is now considered endemic. It is here to stay. The level of antibiotics will be on the rise and the level of death in our waterways as a result of the warming temperatures of the water that put undue stress on a fish that is not native to this country. It is Atlantic salmon. It thrives in temperatures between 15 and 18 degrees. Our temperatures in Tasmanian waterways reach elevated levels above 23 degrees almost every summer and will continue to do so into the future. This is not sustainable.

So hopefully, again, without repeating myself, as it relates to the 2 certifying bodies, hopefully, 3 that disagree with you. Hopefully, there will be further information cast by the study I respect your opinion. It resonates, it lands with us, and we look forward to actually moving forward with a better information set that we might be able to agree on and maybe the study will provide it. Thank you for your question, shareholder.

Chair, we now have a question from Kelly Johnson [indiscernible]

Chair. Firstly, I just want to say I welcome and encourage that Ken Meyer is joining the Board because Whole Foods has a progressive sustainable seafood policy that doesn't rely solely on certifications that goes above and beyond. So I hope that you're able to instill that, Ken.

So my question is directed to Holly Kramer, the Chair of the Board's Sustainability Committee. So Coles has publicly acknowledged the impact of their salmon sourcing has had on the Maugean skate and have assessed their farm seafood impacts on endangered protected running species, importantly, disclosed the results in their sustainability report. These steps resulted in Coles shareholders withdrawing the disclosure resolution at their AGM. In contrast, Woolworths is lagging behind their largest competitor. In response to shareholder Resolution 5B, Woolworths sites using the Taskforce on Nature Disclosure. Disclosure being the operative word, yet Woolworths hasn't actually disclosed the nature risk impacts associated with its farmed seafood.

In response to Resolution 5C, Woolworths refuses to align its seafood policy with global best practice, global best practice that is used by the majority of its peers around the world, such as Whole Foods. Also, unlike Coles or international peers, Woolworths is facing the world's first OECD complaint against a major retailer for environmental violations. I haven't heard the OECD complaint being brought up to the shareholders here today. These guidelines are internationally agreed upon responsible business conduct standards for which governments expect large corporations like Woolworths to comply with. The complaint alleges that Woolworths has not met the OECD guidelines as the company has failed to conduct heightened due diligence for its own brand salmon sourced from Macquarie Harbour despite the evidence of harm to the Maugean skate of protected species and the World Heritage area.

The Board's Sustainability Committee, according to its charter, has the duty and responsibility and I quote, "to oversee the reputational impacts of Woolworths' sustainability strategies, policies and initiatives." So Holly, how has the committee considered the risks of being the only retailer globally to ever receive an OECD complaint for environmental violations? And what does this mean for your reputation?

I'll answer that question. Thank you, shareholder. We are aware of the OECD complaint. In substance, the exact same issues that others have raised. There's no new information on that. So we've been briefed on it, and it will be processed accordingly. So there's really nothing to report. There's nothing distinctive. I think I would be repeating myself if I answered your broader question around sustainable sourcing and the risks. I can assure you that the Sustainability Committee under Holly's Chairmanship has assiduously considered this, spent an enormous amount of time on it, been open to dialogue with all parties on it, and we continue to keep a very watchful eye on it. We're mindful also that there is a determination pending on the Maugean skate from dangered to critically endangered and we're watching that very, very closely.

[indiscernible]

Thank you, shareholder.

If I can follow up, please. So Woolworths continues to justify selling this product, as we know, with deferred flawed certifications. The OECD complaint includes citing the OECD guidelines that due diligence does not -- sorry, certifications does not equate to due diligence. So back in 2021, Woolworths then NGO partner, WWF, released a commissioned review that found Macquarie Harbour certifications had failed to detect and prevent environmental devastation in Macquarie Harbour.

Woolworths responded with the following and I quote, "we are concerned by the claims that existing certifications may not be fit for purpose, taking into account unique environments like Macquarie Harbour." Yet no action was taken. Woolworths continued relying on these certifications to sell salmon. Since then, several independent scientific reviews have highlighted the need for oxygen levels to be measured in the mid- to bottom waters of the harbour in order to detect impacts in the skate habitat. Healthy oxygen levels are critical for the Maugean skate survival, yet none of the certifications, including the new ASC Farm standard, which I was a stakeholder in and my organization was on the steering committee of the ASC standard requires -- the ASC standard include does not require salmon farms to measure oxygen in the skate's habitat.

Woolworths has been briefed and provided this information on multiple occasions. What will it take for Woolworths to shift from being concerned to taking action and stop using flawed certifications to sell Macquarie Harbour salmon?

Thank you, shareholder, for the question. I can assure you that we don't blindly rely on these certifications. Our due diligence process includes having an independent expert review them. And as you rightly point out, ASC, I think it's the previous question a shareholder pointed out, ASC does represent, I think, a new standard for certification, even if it doesn't necessarily have everything in it that you might want. In respect to the specific point that you're raising, again, of the prior speaker, given your domain expertise and knowledge, please, I would -- I'm really not in a position to debate mid-level oxygenation levels at the AGM. But I would like you to speak to maybe Annette to share why you think that is a critical component of certification going forward.

Which we already have. And that's my point at [indiscernible] point.

You shared that with us.

Stakeholder discussions will you take on board that this certification will end up with the same results as the WWF review found that these certifications were not fit for purpose if they are not measuring within the mid- to bottom layers of the harbour.

Well, that's not the advice we've got shareholder. To be honest, that's not the advice we've got. The advice we've got is that the new ASC standard is a best practice standard. The WWF may have their point of view. But you can imagine there are a range of point of views on it. And so we think we are rising to a higher standard and seeking to get ASC certified across our suppliers. But if you don't want to speak with our people that's within your prerogative.

Chair, we now have a question from shareholder, Hannah Schuck.

I might just pull this up, if I can. Thank you. Thank you for the opportunity to ask the question. I would like to speak to Resolution 5D. My name is Hannah Schuck. I am from the [indiscernible] Society, an organization that represents tens of thousands of Australians who want to see Australia's unique forest and bushlands protected. The numbers don't lie. Beef production is the single biggest driver of deforestation across the country. Every 2 minutes, a football field of forest and bushland is designated in Queensland alone to make way for pastures to graze beef cattle.

Meanwhile, nearly 80% of the land clearing that occurs in this state of New South Wales is for livestock pasture. As the largest Australian supermarket and one of the biggest buyers of Australian beef, it is incredibly likely that beef coming from this destruction is ending up on your shelves. I have the signatures here of over 13,000 Australians who have sent directly to yourself, Amanda, the evidence and called on Woolworths to ensure that the beef that you are buying is deforestation-free. These Australians have requested that you set a robust deforestation-free commitment and much more importantly, actually implement it in line with the science-based targets initiative, global best practice. While it's welcome to hear from you, Chair, that beef is a primary deforestation commodity for Woolworths.

In Woolworths' 2025 sustainability report, the company appeared to backtrack to customers, investors and industry on its deforestation-free commitment as it relates to beef. By removing the assessment of beef as high risk and rerating it as a low-risk commodity for deforestation despite clear evidence to the contrary. Further, Woolworths has failed to share with its customers, its investors and all of us a credible traceability system to ensure that the beef that you are sourcing is deforestation-free.

Meanwhile, your #1 competitor, Coles, and this seems like a theme today, has been upfront with the public, its customers, and investors by disclosing the concrete steps as well as the challenges that it's facing, right, to ensure that at least 85% of its fresh beef products are not coming from flattened Australian forests. My question, and then I would like to follow up with a secondary question, if possible, is without citing the flawed EU risk rating, what information does Woolworths have to prove that -- that its beef supply chain is low risk for Australian deforestation?

Please ask your second question shareholder.

My second question is with respect, recent polling shows that Woolworths is the least trusted brand in Australia and 70% of Australians expect supermarkets to do more to make sure that their suppliers are going deforestation-free. Aren't you concerned that your customers might see through the bull and shop at Coles if you can't prove that the beef on your shelves is not killing koalas?

Thank you, shareholder. Can I just add an aggregate sense, invite all shareholders and customers to reflect on the overall sustainability efforts of this company. There are nothing short of outstanding. So to think that we're not concerned or we don't link sustainability with our reputation is certainly not the way we think about it or we feel about it nor we direct our resources nor the way we report. Let me now address specifically the issue of risk in our fresh beef supply chain.

As I mentioned earlier, Woolworths a bit over 18 months ago, decided to uplift the standards we had from no net deforestation to no deforestation in our supply chain in order to meet the high standards of SBTi, Science-based Targets initiative that validate our 1.5-degree emissions plans. As a result of that positive step, we are required to report our Scope 3 emissions into 2 categories: flag and energy and industrial. As part of that, we also need to report on our 5 key deforestation-linked commodities. We believe those 5 key commodities where the risk of deforestation exists are palm oil, cocoa, soy and stock feed, pulp paper packaging and fresh beef. We aren't a global expert on determining the overall risk rating of Australia versus any other country in the world. That's well beyond our capability. So we naturally rely on international agencies who do this. And the EU came out with a view to lower the risk rating of Australia. And we published that in the report at the same time as saying we will continue to report transparently on where we think the extent of deforestation is in our supply chain and what we're doing about it.

The second part of the question was what evidence have we got other than relying on the EU's classification. We have undertaken a first stage analysis of that, a postcode-by-postcode assessment through our suppliers, and we have about 7% of the total fresh beef supply chain in Australia. And that postcode by postcode analysis with aerial photography and drones would indicate that the risk of deforestation is between 1% and 2% of our supply chain. So we have undertaken that work. It's ongoing, and we will continue to report on that risk.

Now what also we're doing is working with industry closely on the definition of deforestation because it is actually different by different geographies. And there are standards that are put forward. We're working closely with the industry to try and determine canopy heights, overlay the extent to which grazing is on plane versus included in forestry, is that grazing part of deforestation or not? There are some tricky issues to work through, but we are genuinely engaging with the industry on an acceptable definition of deforestation.

The final question you've raised, and we are up for this is that, we will report in the future in more detail. We're just starting this exercise on the risks and our efforts to mitigate those risks in those 5 key high-risk commodities, deforestation-linked commodities. Thank you, shareholder.

Chair, we now have one final question from the floor from proxy holder, Victoria.

I'm Dr. Victoria Jack from the Wilderness Society, an organization backed by 160,000 supporters and with a 50-year history of protecting forests in Australia. I'm speaking to Resolution 5E. Woolworths' promised deforestation-free supply chains but endangered koalas and greater gliders are still losing their homes to be turned into pallets to transport groceries. Woolworths uses millions of pallets per year. It accepts the Georgia PEFC certification as evidence that the timber pallets in its supply chain are sourced responsibly and without deforestation. Yet pallets continue to be made from timber logged in some of the most biodiverse forests on earth by Forestry Corporation of New South Wales. Despite Forestry Corporation's repeated convictions for illegal logging, Forestry Corporation remains PEFC certified. And there is nothing to stop Forestry Corporation timber being used to make pallets that end up in Woolworths stores.

Woolworths is telling customers and investors that it's made a deforestation-free commitment, but it doesn't have a deforestation-free plan. If Woolworths continues to rely on PEFC certification, that won't ensure its supply chains are free from pallets made from the destruction of Australia's unique forests. How many more koalas and gliders need to lose their homes before Woolworths actually cleans up its supply chains?

Thank you, shareholder, for the question. Look, this is a real dilemma for us because we are not in the business of pulp, paper and packaging or pallets, but we require our suppliers, we ask our suppliers to get independent certification. The independent certification across the globe, you called it dodgy, it is a bit cheeky. Two of the major institutions who certify 500 million hectares of forestry, PEFC and as you know, FSC, right? We've undertaken -- we've looked at the 2 standards. We've invited PEFC to meet with you and other NGOs and for some reason, nobody seems to want to meet with them. We have a very clear obligation on our suppliers to certify. These are the 2 globally accepted benchmarks. If you think -- if you have an issue with them, please raise the specifics of whatever certification floor you think it is. Please approach any of our suppliers who are relying on that certification. But without -- these 2 entities cover 150 countries. Between the 2 of them, it's 500 million hectares. They're renowned. I mean, they're literally the standard. And so you're expressing a very -- I mean, I'm very -- obviously a very credible view that there's a problem with that certification. Please share the details of that with us, but please also take this issue to the suppliers.

Thank you, Chair. I'm pleased to hear that invitation was extended on your behalf to PEFC to meet with us.

We invited them to, and they told us that nobody was prepared to meet with them or wanted to meet with them. That's not right, we'll then come back to me and then...

That's the first time I'm hearing about it, and we would absolutely take up that opportunity

Have you met with them?

We have met with them in the past.

I would encourage you to keep that dialogue. Can't really call them dodgy without having a current view.

I've checked that with my lawyers. I would just like to respond -- I got to check these things, Chair. I would just like to respond by saying we do engage with your suppliers on this matter, but you have made a deforestation-free commitment. And I would just reiterate that your plan, if relying on PEFC will not ensure that the pallets you source are free from the destruction of New South Wales forests, some of the most biodiverse on earth and therefore, not deforestation free at all.

Thank you, shareholder.

Chair, [indiscernible] this issue. But since you again dodge behind certification, which seems to be the Woolworths attitude. If there's any form of certification, doesn't matter what it is on deforestation or on salmon farming, that's good enough for you. It shouldn't be good enough for you because a lot of these certifications aren't good enough in themselves.

For instance, the certification you use in Tasmania for salmon is not a farm-by-farm certification. It just -- it certifies a brand, which is ludicrous. And that is not the way it should be done. You come to certification of native timber in New South Wales, which is something I've recently spent a great deal of time on in respect of the Great Koala National Park, an issue the New South Wales government was dragging its heels on, but we won that campaign, and that has now been declared.

But in the process of looking at that and looking at the products that you accept from Forestry Corporation, the behavior of that corporation becomes clear. You would know, for instance, that 2 of the contractors to Forestry Corporation were convicted of crimes for attacking an environmental activist. Then a senior executive of that corporation was arrested for a similar crime. There were other court cases regarding the illegal logging of Forestry Corporation. And in one of the judgments on that particular court issue, the judge said this, this is a repeated pattern of criminal behavior on the part of this organization.

Unbelievable. I don't think I've ever heard that, and that's part of the government. That's what Forestry Corporation is 100% owned subsidiary of the New South Wales government. So it is not sufficient for a company like Woolworths who is trying to rebuild its reputation to dodge behind any form of certification. You've got to look deeper into it. And the fact that you would accept pallets made out of Brambles is the second biggest customer of Forestry Corporation in New South Wales, and you would use their pallets. You've got to look behind those certifications. It's not good enough for this Board just to sit here and say, we've got a certification, all is fine. I think that's a fundamental principle.

Mr. Cousins, couldn't agree more with you. So we don't do that. We always seek independent expert advice to review those standards. And it still is the case that PEFC, I don't condone this disgraceful behavior that you report in.

Forestry Corporation who make your pallets.

Well, I'm not sure whether they do or they don't. But I mean, I invite you to take that up, obviously, you have, but invite you to take that up with them. Clearly, the standards themselves, the certification agencies themselves will have taken that into account. I pledged you that we will follow up on this matter with PEFC and arrive at our own conclusion, informed by experts as to whether there's been a sufficient response to the behavior you've outlined.

All right. Thank you. And finally, I would say, just think about this when you leave this meeting. Let's say the million fish die again in Macquarie Harbour. And there are all the pictures on television of them being scooped up and put into the tins and farmed and going into your products. How do you think that's going to go for you?

Thank you, Mr. Cousins, for expressing your view. Thank you.

Chair, apologies, we have another question from shareholder, Hannah Schuck.

I wanted to follow up on the point that you made about needing to look to global bodies for risk assessments, for definitions, et cetera. I would like to make the point that the EU risk rating of Australia is a deeply flawed decision, and it came about via very, very hard and concerted lobbying by government and the industry. It does not reflect the destruction that's happening on the ground. To give you a sense of how ridiculous this is, the EU only lists countries that have EU sanctions against them as high risk for deforestation, not even countries like Brazil, which is a global deforestation hotspot that I'm sure we're all aware of. If you are looking to global bodies for risk rating and in the same sentence, you mentioned that you're working with industry on definitions, what's stopping you from aligning with global best practice definitions on deforestation such as the accountability framework initiative that your competitors have aligned with Coles and ALDI?

Well, certainly, thank you for that question, shareholder. We absolutely will take that framework into account 100%. And I think there's no good reason why we wouldn't be including that in our considerations. Again, this is the dilemma we face. Woolworths is not going to stand up and independently do a global exercise on deforestation risk in the global beef supply chain. We do rely on some independent experts and some certifiers. Your point taken, I'll take your point under advisement in respect of the status of the EU rating, but the overarching point I made earlier on is that fresh beef remains 1 of the 5 key deforestation-linked commodities. We will report on it in that way, and you'll continue to get improved transparency as we go about further determination of the nature and extent of deforestation risk in our supply chain. Thank you, shareholder. I think you probably had enough on this topic, shareholder.

You have a deadline of the 31st of December 2025 to be deforestation-free under the science-based target initiative, of which Woolworths is validated under. So you've got 2 months to show us some of the action. Thank you.

We have a question from shareholder and a team member at your right.

First off, I commend them for standing up. Well done. It's not easy, as you know. And it's not easy for me. So in the store, we use 2 types of pallets. We use the green pallets, which is 3/4, 2/3, and then we use the timber pallets. So speaking back to the safety issues, the timber pallets are incredibly heavy. They're coming in, in more of a dilapidated state. They are a safety issue in themselves. The green pallets are you can -- well, you can pull with 2 fingers. They're so light. They're really good. We've done great things like the new trolleys that are made out of recycled things, all of the stuff that we've got in the store that's been made out of recycled milk cartons and things like that. the bags, all of that. This is not a big step. This is -- leads to making happy campers here and happy campers in the store as far as the stresses -- the physical stresses of using these pallets along with the safety issues.

So I think it's not a far -- too far bridged across for Woolworths to look at creating more of those. I know there's logistical issues with the trucks and stuff like that and maybe a more robust form of recyclable pallet. But I think it would be a win-win for you guys as well as for us and for them. So just a comment.

Thank you. I'll now turn to questions online.

Chair, I have an online question from shareholder, Stephen Mayne, relating to Item 5B. This Woolworths AGM has been another classic example of why public companies should disclose the proxy votes to the ASX prior to the commencement of the AGM along with the formal addresses something Origin Energy, which Scott Perkins also chairs, has been doing continuously since 2008. Sadly, you delayed disclosure today, which is a bit like asking Anthony Green to run election night analysis without any voting data. Why didn't you reveal the 15% remuneration report protest vote until after closing the debate on that item? What is the issue? You only flashed up the proxies on the shareholder resolutions at about 12:40 p.m. Those proxies showed a stunning 34.17% in favor of Item 5B, even more than the 30.4% achieved last year.

Your shareholders, not just those who own 0.004% of the company are clearly revolting, which of the proxy advisers backed the shareholder resolutions? And will you undertake to disclose the proxies early before next year's AGM?

Thank you for the question, Stephen. We will look at that. Frankly, I'm not certain why [indiscernible] practice goes one way or the other. So leave us with that to me to come up to speed with that issue. There was no intention to flash these up. Very happy to put them back up again. They will be published and they go to the ASX. I would take issue with any form of sort of shareholder revote on this. There is clearly a voice in respect of that resolution that did get 34% that we need to continue to improve our disclosure around risk, and that's something we have actually pledged to do today's speech. So we've responded to that. So thank you for your question.

Chair, there are no further online questions.

That concludes the discussion on these items. Thank you, ladies and gentlemen. That concludes the formal items of business for today's meeting. I would like to remind shareholders who have not yet cast their votes on all resolutions to do so now.

[Voting]

I now declare the poll closed. As mentioned earlier, the results of the AGM will be announced to the ASX later today and placed on the website. A full transcript, along with the webcast of the meeting will also be available on the website. I would like to thank all of my Board colleagues, Amanda Bardwell, the group executive leadership team and all of our team members for their dedication and commitment over the year.

Finally, I'd like to thank shareholders for your ongoing support of Woolworths Group and for attending today's meeting. That concludes the 2025 Annual General Meeting. I now invite you all to join me, my fellow directors and senior management in the foyer outside for refreshments. Thank you very much.

Ladies and gentlemen, thank you for standing by, and welcome to the Woolworths Group F '26 Q1 sales announcement. [Operator Instructions] I would now like to hand the conference over to Ms. Amanda Bardwell, Managing Director and CEO of Woolworths Group. Please go ahead.

Good morning, everyone. Thank you for joining us today for Woolworths Group's first quarter sales results for the 2026 financial year. I'd like to acknowledge the traditional custodians of the land on which we meet today, Darug Country, and pay my respects to Elders past, present and emerging.

Joining me this morning are Stephen Harrison, our Chief Financial Officer; and Annette Karantoni, Managing Director of Woolworths Retail; Sally Copland, Managing Director of Woolworths New Zealand; [indiscernible], Managing Director of Group eComX and Dan Hake, Managing Director of BIG W.

I will begin by acknowledging that the group's overall sales performance during the first quarter remains below our aspirations. However, the changes we've made to improve our offer in areas that matter most to our customers, value, convenience and availability are being recognized. With group customer metrics up on prior periods and an improvement in sales trends over the month -- over the last month. Group Voice of Customer NPS increased by 4 points compared to the prior quarter and 3 points compared to the prior year, driven by improvements in Australian Food and New Zealand Food. We are focused on rebuilding momentum in the short term, but are also clear on our longer-term strategic priorities, which we laid out in August, and we've continued to make progress on these priorities during the quarter.

Now turning to performance by business. In Australian Food, total sales increased 2.1% and Woolworths feed retail sales, total sales increased by 3.8%, excluding tobacco, supported by e-commerce growth of 12.9%. While customers are recognizing the improvements we are making, we know there is more to do to improve sales momentum in Australian Food. In September, we uplifted our investment in rewards and e-commerce offers and weekly promotions on key family lines like Nappies, Bananas and chicken breast to provide customers with more value and more reasons to choose Woolworths first. Item growth showed a modest improvement over the quarter, but this was offset by an increase in deflation in fruit and vegetables in the latter part of the quarter. By category, growth in fresh and grocery food was solid, while pet, Baby and Home Essentials continue to underperform in store, reflecting a competitive market and a need for us to improve our customer offer. Average prices ex tobacco in quarter 1 were down 0.3%, marking the seventh consecutive quarter of lower prices for customers driven by deflation in fruit and vegetables as a result of increased supply on key lines like berries and avocados, partially offset by higher meat prices, which continued to be impacted by rising livestock costs.

Long-life categories, including pantry, snacking, freezer and everyday needs remained in modest deflation during the quarter. We know our customers want reliable, lower shelf prices every time they shop with us, and we added over 100 products to the shelf price, bringing the total to over 750 everyday items. These lower prices are resonating with our customers, reflecting in double-digit unit growth across the program and improvements in value for money book, up 5 points compared to the prior year and 3 points compared to the prior quarter. In eCommerce, growth in convenient on-demand proposition was to highlight with e-commerce sales delivered or picked up in under 2 hours, increasing by 39% as customers continue to value the increased convenience. Cartology revenue grew 4.6% and albeit at a lower rate compared to prior periods due to cycling several successful promotional events in the prior year. Everyday Rewards and services sales growth was driven by everyday mobile and insurance with combined customers growing 5%.

Active Rewards members in Australia increased by 4.5% compared to the prior year to [ $10.5 million ]. In Australian B2B, sales increased by 6.2%, driven by B2B food with growth in PFD and export meat sales. In PFD, growth to food service and QSR customers remain strong. B2B supply chain sales declined on the prior year, reflecting the impact of a decline in tobacco sales on statewide independent wholesalers in Tasmania. Third-party supply chain sales through PC+ increased, reflecting solid growth in international logistics and an increase in new and existing customers using our cross-dock warehouses. Sales momentum in New Zealand improved over the quarter as competitor activity normalized with total sales growth of 3.2% driven by strong eCommerce growth and successful promotional campaign. Customer metrics in New Zealand continued to strengthen on the prior year with improvements in value for money and fruit and vegetables with metrics stable on Q4. eCommerce sales increased by 15.8%, with penetration reaching 16.8% driven by strong growth in convenient on-demand e-commerce propositions like MILKRUN and Darug to [indiscernible]. Everyday Rewards sentiment and engagement in New Zealand also continues to strengthen with customer advocacy up 11 points and active members increasing by approximately [ 250,000 ] compared to the prior year. In BIG W, total sales, including the W market, increased 1% with a more favorable sales mix, reflecting an improved performance in clothing. The W's gross transaction value, including the W market, increased by 5.7%, with strong 3P growth. Sales in the quarter reflected a higher proportion of full-price sales supporting improvements in range quality and availability of summer stock, favorable weather and cycling significant winter clothing clearance activity in the prior year.

As well as an improved performance in clothing, we saw solid growth in Play and Home. However, everyday sales remained challenged with a decline in cosmetics, party and everyday essentials in a highly competitive market. The BIG W eCommerce sales increased by 12.3%, primarily driven by the inclusion of BIG W market sales growth, reflecting the decision to integrate the marketplace and leverage the significant digital traffic in BIG W. ECommerce commerce GTV increased by 46.3% with 1P eCommerce sales growing 6%. Pet stock sales increased 15.8%, largely driven by the opening of 6 net new in-quarter stores and the acquisition of Big Dog and Time pet following the exercise of convertible notes. Comparable sales increased 3.9%, supported by value reset, increased marketing and solid own brand and e-commerce growth.

With only 8 weeks until Christmas, we're determined to give customers every reason to do their entire shop with us that will work. We have strong plans in place to deliver a fantastic festive season for our customers starting with Halloween this Friday with much to look forward to, including a refreshed Christmas seasonal range, which we know our customers will love. Woolworths Food retail sales in quarter 2 to date have increased by 3.2% or 5%, excluding tobacco, as we continue to focus on rebuilding momentum. Looking ahead, we are cautiously optimistic about our key trading quarter and remain focused on getting back to our best. It will take some time to see the full benefits of our strategic actions to be realized, but we remain confident the steps we are taking will lead to meaningful improvements for our customers and importantly, our shareholders.

I will now turn over the call to the operator for questions. To give everyone a chance, can I please ask that you limit it to 1 question per person and then rejoin the queue with any follow-up questions. Thank you.

[Operator Instructions] Your first question today comes from Adrian Lemme with Citi.

Was just interested in that commentary on October. Is it a softer comp than what you saw in that September quarter? And can you clarify, you're seeing the improvement coming from online given all the bonus points offers we've seen? Or is it mostly coming in in store?

Yes. Thanks, Adrian, for that question. So when we look at the year-to-date I actually think about it really in 3 phases. So maybe just to start there. So firstly, as you know, the first 8 weeks were well below our aspirations. Then when we look at those weeks really 9 to 14 certainly, what we saw was an underlying improvement in items, underlying steady improvement in transactions, but somewhat offset by the fruit and vegetable deflation. And so you see that in our results. We also have seen, as we've reported our quarter 2 sales, a steady, modest improvement in items and transactions as we've as we've come into the quarter. And that's what we're focused on. We're focused on building sales momentum. It's the critical quarter for us. We're really excited about the plans that we've got in Australian Food as we come into Christmas. And we're asking our things to be really focused on bringing the very best of release to customers this Christmas. So it's been a steady, I would say, modest improvement that we've seen across the quarter and into the second quarter.

I think I just said there's not much difference in the base that we're cycling over between Q1 and the start of Q2 last year.

No.

That's very helpful. And just to be 100% clear that you're not seeing any material difference in terms of the online business in store trends that you saw in the September quarter into October?

Yes. Thanks, Adrian. I would say -- some micro improvement actually in terms of our store performance if I was to call anything out. Both online continues to be a really strong performer for us obviously driving a huge proportion of our growth. What we've been pleased to see and I wouldn't want to overplay this, it's very, very early days, but a modest improvement that we're seeing in our stores performance as well. We'll continue to focus on that.

The next question comes from Michael Simotas with Jefferies.

Can I just follow on from that question on the October trading update. I guess just a little bit wary that it is such a short period. I think it's 3 weeks -- you sort of talked about investment in loyalty, et cetera, in the month of September. We've also sort of heard some feedback that some of the categories have seen stock weighting uplifted a little bit to address some of the availability issues. Do you feel like there has been a little bit of a positive step change in the business in October? And is that relative to the broader market? Or is it just too short a period to tell?

Yes. Thanks, Michael, for the question. So let me just start by saying we said we would take action when we last connected in late August, and we had a lot of that has been focused on improving our customer engagement and uplifting our offers. So you're right to call out certainly a focus on loyalty on some of our promotional activity, but also some targeted activity around availability as well. That really didn't start to flow through until late in the quarter, so mid- to late September. And what we're calling out is really a modest improvement as a result of all of those actions that we're seeing. I too would want to just reinforce your point, which is it's very early days, but we are pleased with what we've seen in terms of the customer response to those activities. It gives us something to continue to build on as we head into the critical quarter for sales in quarter 2. So we're very focused on that. And our team's response as well has been excellent. And so yes, I would say early days, but some early signs of progress being made.

Your next question comes from Tom Kierath with Barrenjoey.

Amanda and team, I got a question on the promotional environment. I think in the release you're saying with reference to Cartology that there was a lower rate of growth due to cycling several promotional events in the quarter, including the Olympics. It just be interesting if you could maybe give us some color on the promotional environment. And it looks like you've kind of maybe moved away a little bit from collectibles or funding that as well and then maybe a bit more into the rewards programs and the kind of loyalty in the point side. But just a bit of -- I guess, clarity on that would be really helpful?

Yes. Thanks, Tom. Just to pick up on your question on pathology. What we're calling out there is the sales growth that we have shared is -- just lower than what we've seen in recent times. And that's a case because of really a couple of things. One is the Olympics that we called out. And the other is the Disney program. It didn't perform to expectations overall. And so there has just been a year-on-year comparison slightly softer promotional program for Cartology to be able to work with our supply partners on. So that's what you're seeing there. When we look at the promotional activity overall, we said that we would take action in terms of building sales momentum. We said we were certainly not satisfied with the results that we've delivered in terms of sales. And so we absolutely did through mid-September and continuing went back and had a look at -- have we got the right balance in terms of our Everyday Rewards activation. .

So first and foremost, you will have seen more visibility around everyday rewards in our stores and online. And that's about making sure that customers and members more broadly are aware of offers. And so we did the all member offer on point split, for example, which requires you to scan and you then get those additional benefits. We also have uplifted some of our personalized offers as well. But we wanted to really improve the value that we're providing to customers and members through everyday rewards. We have also reviewed all of our promotional activity across Woolworths retail. And then the last and certainly not least, we've increased the generosity of our e-commerce offers. We want to make sure that when customers are thinking about value they're really thinking about it in terms of, as we know the product price, the promotions, but also all of the other value that they're able to capture from Woolworths, whether that be through loyalty or through other customer acquisition offers.

And so taken that action. We're pleased with the early results in terms of improved engagement from customers in various different ways. So we look at our Everyday Rewards program, some nice improvements in terms of boosting numbers, digital traffic engagement continuing to improve. Some of that has translated through into some modest improvements we've called out in terms of item growth and transaction growth. And so we're very focused on making sure that we just continue to build that as we look to the sales quarter that counts the most, which is quarter 2.

Next question comes from David Errington with Bank of America.

Amanda, look, and I'm a little confused at the moment. And I'm confused because I want to believe that the business is resonating with customers, with your voice of customer. I want to believe that you're starting to get more traction -- but then the lag, if you like, and the numbers just aren't demonstrating that. And where I'm going with this is when you talk your item -- your comp item growth this quarter was [ 0.5% ] your comparable transaction growth was only [ 0.1% ]. The volumes are really, really down. And I just listened to you answering Tommy Kierath's question then. When you're really putting a lot into everyday rewards, you're really putting a lot into these offers. Now I do a lot of shopping. I do -- I don't take my everyday rewards card. I just want the lower shelf price, and Coles has a high low or they are the lower shelf price. You guys have got to go through this everyday rewards thing.

And I'm just confused. I think that this feedback that you're getting from your existing customer base might be pleasing, your existing rewards might be pleasing, but new customers are not coming back into the store. So can you give us a bit of an idea as to why this disconnect between actual performance and feedback from your customer base? Because that's the bottom line. Why is there this disconnect? You're getting positive feedback. We like to believe it, but it's just not resonating in the numbers. And I'm really just -- I'm confused as I've ever been?

Okay. Well, thank you, David, for that. And thank you for shopping with Woolworths. I'm going to assume that, that was Woolworths that you're shopping at and referring to there. Yes, let me just just take a step back and say what we're calling out is very modest early signs of improvement. And I certainly don't on this call want to suggest anything other than that. And yes, you're absolutely right. We have got a strong customer franchise of customers that are reporting consistently better experiences that we're tracking through the 60,000 voice of customer surveys we do each and every week. However, it is also the case that we need to continue to improve our reach across the broad grocery customer base. And so yes, I did talk to everyday rewards and loyalty there.

So you're right. What we did with that is make sure that we uplifted it and made it more visible for those people who perhaps it's not front of mind for in terms of everyday rewards and the value that you can capture from that program as a customer. But we also recognize, and I agree with the point you make, which is we need to appeal more broadly in terms of value and making sure that customers are aware of that value. And so across certainly, September and into the Christmas quarter, you should expect to see from us. A more visible offer, whether that's through the traditional catalog, for example, bringing to life the product and price offers. Continuing to improve the promotional program that we have available.

So key lines that really matter particularly for families at great prices. and making sure that we have the stock weight that's required to be able to sell those products right throughout the entire week. So just to summarize and come back to your overall point. Yes, we've got a strong franchise of existing customers that have continued to deliver better customer experiences, but we've also got an uplift that we need to do in terms of our broader reach of customers and that's what we've done.

Yes. That seems to be the point the broader reach. And if you can get that broader reach in this quarter, you're setting yourself up for a pretty good second quarter. So all power to you, if you can pull that off.

We are -- I can just say we are hyper focused as a team. I'm just looking at a net peer across the table. We are very focused on that. We've had some great events with our team over the last month as we bring forward for them out what we've got planned for Christmas, store teams are feeling well supported. Our commercial teams have now settled in with their new leadership structures, and we are hyper-focused on making sure we bring the absolute best of Woolies this quarter.

The next question comes from Shaun Cousins with UBS.

Question is just regarding nonfood fellas. I think you've called out Baby Pet and Home essentials are still weak. Could you talk a little bit about the changes that Woolworths has embarked on to address the share loss in nonfood? And is it fair to say that you're still losing share in that category? Or do you think you've gone some of the changes you've made have gone some way to holding share loss, please?

Yes. Thanks, Shaun. And yes, we continue to need to focus on those everyday these categories. Absolutely. They're a part of our offering that certainly not performing to expectations, and we need to continue to do a lot of work on. If I just talk about a couple of those categories, and then I'll start to you in on -- just when we take the pet category. There are a number of areas here where we can and should do better. And so when we look at our price competitiveness, particularly in bulk range in dry dog food, for example, we know that, that's very competitive, particularly with some of the recent entrants into that market. We've taken the opportunity to sharpen up our unit pricing there. In baby, there is a number of challenges we had in the quarter with own brand not the availability. But certainly, we have focused there and just being more competitive. I mean young families for us are such an important customer base. And so as we've looked at what do we need to do better, that's certainly been an area of focus for us. And so as we have looked at the performance of the business overall, there has been a series of actions that we have taken that are live in the market.

And then there really is a much larger, more ambitious reset that needs to happen across those categories in terms of the offer, which will progressively show through over the next 6 to 12 months. But I know that's an area very focused on. Anything else you want to add there?

I think that's right, man. I think the sold for some of these categories where we'd like to see improved performance. It's really -- you have to operate in multiple horizons. So there's a very immediate piece of work being done, as you've mentioned, around the pricing and the products that are on the shelf and availability of those products. And -- in baby, we had a very good launch of [indiscernible] earlier in the year. But really, we've amplified that activity in the plan that sits around baby albeit we have had some challenges in availability. But what you'll see in the new year as we come in some plans that have been underway for the last few months is some improved product, some rebranding of some packaging. And you'll actually see us reset the baby category. So you really have to operate on multiple horizons. And as you've mentioned, very similar in Pet. We've now -- we've had a really great level of success with some of these bulk products on LST, our lower shelf price program.

We -- things like pedigree and 8-kilo dog food product that's now as a bulk product sort of sitting just above $3 a kilo and our customers are really are really taking advantage of that really great bulk wealth value and those larger pack sizes are certainly something that we hadn't hadn't been focusing on in the past. And again, new products coming in in the cat category this side of Christmas, but actually in the new year, you'll start to see some of those things shift in the dog category. So I think it is a multi horizon. You have to be able to operate and drive the business in the current quarter, but we've also got to be building the plans into the future. So very big focus for us.

Yes. And I think great to see also that [indiscernible] the cat food range coming in from pittock into the Woolworths retail offer as well. And so that partnership with pet stock being able to access some of the really great own brands that they've developed there is also pleasing to see. .

Yes. And more to come in the new year. I can't speak to them on the call specifically. But in February, you'll see some of those fees happen in adult category as well. So very excited about what's coming. And I'd say very similar in Personal Care. It's another category we're very focused on. We've had some really great launches this year with Treehut, and some of these innovative categories that our next generation of consumers are really coming into our stores and actually asking for before they even hit the shelves when they hear that it's coming, we'll continue to do those things and very similarly shape the category into the new year.

Sorry, just to be clear, so you think you're still losing market share, but you've got a plan to fix it. Is that -- you've outlined a lot of detail around short and sort of medium-term horizon about how to address it, but is it fair to say that you're still losing market share?

Yes, I think it's fair to say that we've got a lot of share is -- we've got a lot of work to do. We're seeing an improved, very slight improvement in our performance as we've taken some of these actions. But let's be frank on this call, we've got a ways to go when we're focused on that. We haven't -- we're not calling, but we're satisfied with where our share position is or has been.

Your next question comes from Caleb Wheatley with Macquarie.

Amanda and team. Just a bit of a follow-on from some of the prior questions, but more specifically around cross shop. Some of the data we're seeing is looks like a lot of that market share shifts over the past 12 months or so have been related to that cross shop between you and your largest competitor. Any comments that you can make on what you're seeing on the cross shopping front either through the first quarter and into the the Q2 trading update today, please?

Yes, thanks. Let me talk about cross shopping to start with, and then I'll just share a little bit to what we're hearing from customers as well. So -- in terms of cross shopping, we're sitting at all-time record, I'd say, this time last year. What we've seen is a slight easing of level of shopping actually across the market overall. So I'm ot talking about any one particular competitor. It's a very broad market as we know now, for groceries in particular. So we've actually seen it come down and stabilize. So that, from our perspective, is obviously pleasing to see. If we talk to customers as we do regularly in research and focus groups, we continue to hear a large portion of customers would report that as cost of living eases as they look forward to that, they will also look forward to reducing the cross-shopping that they're doing. Now we haven't seen that dramatically show through today other than the reduction I called out just earlier. But that's certainly a very strongly held view from customers as they look to safe time as cost of living pressures start to ease.

And then we're very focused on quarter 2 in sales right now. We're also being very curious as to where our customers are in terms of their sentiment overall. And we're also pleased just to hear that there is an increased level of optimism around Christmas this year. So as we've been tracking at those levels of excitement and looking forward to sentiment from customers has been increased on this time last year. And in fact, they're also calling out that they would like to spend a little bit more time cooking and celebrating with friends. And we're looking to do that in a very modest way. I don't want to call that we're seeing a very large swing here, but certainly compared to where we were in the last couple of years. There's a definite uptick in customers looking forward to Christmas. Customers reporting they'd like to cross shop less when cost of living pressures ease. But of course, the market has changed a lot over the last 5 years. And so we know we've got better offer for customers so that they continue to choose us first. And we've shared today, we've made some adjustments over the last quarter, but we've got a lot more work to do to continue to improve that.

And to be clear, that slight easing for the year by fiscal year-to-date? Or has that really started to ease in the second quarter so far?

That's actually over the last 6 months, we've seen a stabilization of that with customers then reporting that they would like to decrease. We need to see that happen. So to summarize, I would say, it was at record levels this time last year. It's reduced as we've come into the calendar year, stabilized and now we have customers also reporting that they would like to reduce the level of cross shopping and save as at a time. We haven't [indiscernible]. Yes.

The next question comes from Bryan Raymond with JPMorgan.

My questions back on sort of availability and just particularly around inventory and labor. I just wanted to understand that given your flat in-store sales profile at the moment, supply feedback does indicate that availability levels have dropped year-on-year, and there's been some action taken as you've highlighted. But -- just want to understand the drivers of it and the way to fix it given what we understand [indiscernible] levels, et cetera, are sort of back to normal generally? Is it in-store labor hours? Is it how you're planning your inventory and promotions until categories and then just can you get it back on track for Christmas is the key factor that we're all trying to work out?

Yes, just let me just start with your last point. That's absolute incision on track for Christmas. So from an availability perspective, if you call out, Bryan, it's overall, if you look at our national numbers, whether it's on store service level, where there another measure that we use, which is or availability or yet another measure we look at, which is actually on first half pick for eCommerce. All of those are solid. However, as you look then at the detail of how individual stores are behaving there is opportunity for us. And so we have made a number of adjustments, as you say, to our settings when it comes to availability. So first and foremost, an upweighting of promotional stock on key lines in particular. And that's based on feedback that we've been receiving from suppliers and some of our store teams as well.

So we have made adjustments there. We also have taken the opportunity to look at some stores in terms of the hours that they need to be able to keep promotions on show. And then particularly for some of our higher promotionally indexed stores. who are trading very strongly. And so we've made some adjustments there, and we'll continue to look at that as we move into really the critical, critical time for us with Christmas. And then are there any other callouts you would make on availability? Look, the only other one will I probably to amended, there has been some challenges in the business. And it's a bit of a combination of a couple of things that the constant increase in livestock prices did have a thinking that the consumption of meat would actually come back and it actually hasn't. And so we've readjusted our livestock plans, and that will definitely solve well before Christmas, which is pleasing, but it's not quite where we like it, we like it to be. And the only other thing I would say, and I think that Bryan mentioned it is we are constantly looking at our hours in stores to make sure that we have the right amount of hours to make sure we're filling our product and in particular back. Yes. yes. And then the other, which is more category specific, as you say, would just be the demand we're seeing in some categories. And I know that you reported earlier this morning as well, just if you take protein yogurts, for example, just the volume there in terms of double-digit unit growth, it's just incredible, is continuing to present some challenges in the chilled category. I know for us, but that's more of an industry-wide challenge.

Your next question comes from Ben Gilbert with Jarden.

Just a little -- the comments around promotions and promotional effectiveness in the below the line and then the above the line -- have you actually step changed versus your plans say, 6 months ago, 3 months ago from what sort of kick started this sort of improvement in October? And if that's the case, are you seeing a greater return on investment from promotion? And do you then lean into that a bit more aggressively to get the traction back?

Sorry, Ben. I might just need you to repeat that question for me. It was breaking up.

Apologies. Just in terms of the comments you made, how you've changed a number of things in terms of planning around promotions below the line and above the line, and we're seeing some early signs of that in October. Is that a step change from where you were thinking 3 and 6 months ago in terms of dollar spend. And with that in mind, if you're seeing a higher return on investment around promotions, do you lean into that more aggressively now into Christmas to really get that momentum back into Christmas and kick start into the year for '26?

Yes. Thank you. Thanks for that question. Yes. So from an above-the-line perspective, we've been really pleased with the activity that we have overlaid into our plans. It just brings more visibility for members around the value that you can get back, but also the value, obviously, that they're earning as a result. And as we know with our loyalty program, that comes back into our stores as they choose to burn those rewards points. So we've been happy with that, and it is a step change. So you're right to call that out. And the team are very much getting in and behind our everyday rewards, loyalty program. And then with the below-the-line activity, we have been improving our personalization capability here. And so as we've adjusted activity certainly in this quarter. We've also been unleashing some of that new capability that we have in the one-to-one space. And creating more value for customers but also giving our supply partners more opportunities to be able to partner with us in this space as well.

When we're thinking about value, we just want to come back to the point that David made overall, which is we're looking at value from a shelf price perspective. We're looking at the loyalty and the rewards program that we can offer, and we're really pleased with the results that we've seen recently from everyday rewards, but we're also conscious of the marketing activity needs to be broadly accessible. And so making sure that we're in all the right places, whether that be the catalog, the digital YouTube TV, et cetera, is incredibly important. And so we certainly intend to be very present for this quarter ahead. It's about balance and getting that balance right.

And are you seeing resonate with the main shoppers because it seems like there's a lot of meat like poultry, there's some big basket activations that are coming through. And I don't think we less had a traffic issue at all, sustain a type of shopping doing that main shell. Are you seeing any green shoots around the main shoppers or the big shops?

Yes. So we certainly have been very focused on what are the lines that are going to matter most to families. And have we got the right shelf prices, have we got the right promotional pricing and then how we got the right incentives everyday reward. And so some of those key lines that you call out are really important basket builders for us. And so we've been very focused on that because we do want to continue to see those early signs of improvement, very early days in terms of transactions and items into store. We want to see that continue to build, and that's obviously part of our plan to be able to deliver against that.

Your next question comes from Craig Woolford with MST Marquee.

And you've had a strong emphasis on this customer trust, your voice of the customer scores as a prerequisite for better sales and that has now improved. But the first quarter sales trends softened even if we look at volume metrics like transactions. So just interested, would you list other factors other than trust that you need to see improved to -- in order to see better sales growth?

Yes, absolutely. So let's just start with -- for us, even the lower shelf price program for us is a good litmus test of exactly that and what we're seeing, the lower shelf program is actually double-digit unit growth coming from that. So that for us is a real indicator of some of those actions that we've taken absolutely resonating with our customers. When it comes to the sales trajectory across the quarter, I mean, again, just to be really clear, well below our aspiration. So it certainly wouldn't say anything other than that. What we've seen though is an improving underlying momentum when we look at things like items across the quarter. And so that's what we're particularly focused on is item of growth and of course then, of course, transaction growth as well. And when you look at it on a month-on-month basis, we have seen some very early, very modest improvement in terms of items across that first quarter and obviously into quarter 2.

And so that's for us, is a key metric. When we're looking at quarter 1 sales, there's the back half, the impact of fruit and veg deflation, which does play through that. But again, I want to just be really clear, we do need to continue to be focused on transaction growth. We're very focused on getting better growth into our stores as well. accompanied by e-commerce continuing to be a really important driver of growth for us as well.

So you don't see any other factors that need to improve it's the voice of the customer is there, but this feels like there must be something else?

Yes. So in a broad context, if we just step back from the quarter, what we've also called out is there's the activity that we've undertaken to improve our sales momentum. And then we've also said, have we got the right products and prices in each one of our key categories going forward. And we've talked on this call about the fact that every day needs category more broadly is one that is underperforming for us. And that requires a combination of being sharper on some of our promotional pricing in the short term, but also there's a reset that's required around that range. Have we got the right bulk pack ranges in the pet area net called out earlier, have we got the right offer for our young families in baby. And what we would say is there's opportunities for us to do that. And so you'll see some of those things start to play through across the next 6 and 12 months. And then there's also the fact that, as we've talked about on this call as well, availability, just that reliability of making sure that we've got the promotions available when customers are wanting them, including over the weekends and late in the afternoon.

We want customers to be able to count on us. And it's that, when we're talking to customers who are looking at research, a lot of it is about Woolworths just being increasingly reliable. That's reliable on price, reliable on having the products there, reliable that eCommerce window is available when I want it. And they are the things that we know will see us continue to improve our trust scores, it's not any one thing.

The next question comes from Richard Barwick with CLSA.

And I also had a question around online sales growth. So very, very strong this quarter, but it seems that you've called out some of the shorter turnaround I guess, options as the driver of that growth. And in the past, you had called out those options has probably been relatively lower margin. Is that -- does that still remain the case? Is that the way we should be thinking about the sort of mix within online sales?

Yes. Thanks, Richard. We certainly have called out the -- and I think it's quite extraordinary growth that we're seeing in the on-demand space. We've got 42%, 43% of our orders in delivery now that are in that on-demand space, growing rapidly. So for us, we look at that and it gives us confidence that certainly, that demand for speedy delivery is fast service is where customers are increasingly going. We also have seen some great growth, by the way, in our collections business. And so that for us is a particularly important part of our eCommerce offer overall and continuing to grow really strongly. And then from an overall sales call, of course, but just in terms of the way that we think about mix the mix of sales and profit that we see from on demand.

Actually, we're very pleased with the performance that we see there. It's got a different mix of products in it. It's serviced in a different way. And we're seeing an increasing number of customers actually increasing their frequency in their overall spend. So we're absolutely delighted to drive the growth of certainly our on-demand business. What we've done over time there is improve the productivity of that channel. We've done a lot of work to be able to be more efficient in the way that we pick those. So no, that's an important part. We want to win in that ultra convenience space. I'm just looking at Annette, anything else, Annette you would add to that.

No, I think you said it well, Amanda. There is the convenience for the customers really want to shop at short notice. Which is what we are driving through on demand and the convenience in terms of places where people are very comfortable picking up from stores, which is actively driving that, which again, as you can imagine, is structurally advantaged from a profitability point of view.

So it's the pickup increase as well, which is a key, I guess, contributed to the margin mix?

As when -- while -- as we've reported, while online overall has grown at 12.9%, pickup in collections have grown at 19%.

Your next question comes from Phil Kimber with E&P.

I just had a question on the Australian Food business. You've got a comment in Page 3. That says after a challenging start to the quarter. Customer investment was increased. I just wanted to understand better I know it's a sales call, but you do have profit guidance out there. Was that effectively your plan the whole time to increase your customer investment across the quarter? Or was it more a reaction to weaker than or weaker than what you wanted sales growth? And have you been able to sort of adapt costs on the other side to sort of try and match that increased investment?

Yes. So let me kick off on that one and then Steve, you might want to add to this as well. Certainly, what we said at the end of August, Phil, is that we needed to improve momentum that we were seeing in our Australian food business and that we would be focused on building sales momentum, and that's exactly what we've done. That has required us to go back again and rebalance a lot of activities that we're doing across the business overall. But to make sure that we're putting investment in the right places. And so that has absolutely been the case with loyalty and some of our product promotions and marketing activity. Also has been the case when we look at availability and just making sure that in the late afternoon, over the weekend and into Monday, that we've got the right level of product available for our customers at some of the busiest times, certainly of the week. And so we have taken action on all of those things.

However, we, on this call, have got nothing further to add in terms of our overall outlook that we provided with regards to profit. And so Steve, I might just hand to you.

Yes. Thanks, Amanda. [indiscernible] you've been following the sector for a long time. Sales drives the economics of these businesses. So investments that drive sales -- can be good for the P&L. We gave some earnings guidance at the -- in August, with only 3 months into the year. There's nothing that we see that requires us to give any update to that. As you know, there's many levers in our P&L that we need to get right. We've got a strong cost discipline and delivering savings that we committed to and that remain on track. For that $400 million savings. The team has talked to some of the mix impact on e-commerce, which can and should be positive. And we said in August, we're not happy with our stock loss performance. So we've got an ongoing focus on stock loss, all of which are levers that we need to manage in delivering both the top line and driving our sales momentum, which is the #1 priority as well as delivering the bottom line, which is also important for us and our shareholders.

Your next question comes from Michael Simotas with Jefferies.

Taking a follow-up. Just keen to understand where you think you're up to with availability, particularly in some of those high turnover stores Sunday afternoon relative to where you need to be?

Yes. Thanks, Michael. We would agree we've got opportunities certainly and exactly as you called out, the high-volume stores and also some of our high promotional mix stores over the weekend and also in some stores late in the afternoon as well. We have taken a number of steps across the quarter to improve. Our overall availability metrics, again, at a national level are very solid. It's the detail in terms of individual stores that has needed to be addressed. And so -- we've done a number of things around upweighting some of our promotional stock way to front end and also for some key stores that are very promotionally intense. We've got targeted activity across those stores also in terms of just the hours the team needs to be able to make sure that those products are available, and we'll continue to monitor and manage that, and make sure we've got those settings right as we head in now to 8 weeks to Christmas, absolutely critical. We get that service level right. So we'll just continue to optimize that as we go forward.

But you still think you've got a little bit more improvement to make there?

We do. We can -- again, it's one of those interesting ones. You can look at the overall numbers. We really need to get into the very specific details all by store hour by hour, and that's exactly what we have done. [indiscernible]

And your store teams have the tools and the ability to communicate where they feel like they have more gaps than they should?

They have -- sorry, just repeat that question.

Or do they have the tools to measure availability in their stores and communicate it through to head office where they feel like they're missing out on sales because of availability problems?

Yes, they absolutely do. I can assure you they also share that both directly with us when we're out visiting stores in [indiscernible] and Rose lands on the weekend and those stores are both very promotionally intense, and the store teams would absolutely raise that with both in person and directly, but also through the various operations team, and we've made the appropriate adjustments there. They've got the ability to be able to manage the hours across the store. But also to recognize when they need to make the appropriate adjustments. And everyone in Woolworths is very clear, we're focused on driving sales and making sure everyone's got the tools available to them to be able to do that.

Your next question comes from Bryan Raymond with JPMorgan.

Back on loyalty offers that stepped up in September and October. I just wanted to get your thought on the magnitude of that step-up and trying to put it in context on the mechanics of it from a P&L perspective, we're a bit different to a promotion, but -- is there a way you can quantify the amount points either issued or redeemed have increased and also how that flows through? Because I'm just trying to put into context of this mid- to high single-digit EBIT growth and whether this was all in the plan and kind of all on track, as Steve mentioned, it's too early to change that. But just trying to understand the magnitude of this change? Or is it -- how significant it is?

Yes. Look, Brian, I wouldn't put a figure on it other than to say, we always, as we head into Christmas, do have an increased level of focus on loyalty and rewards points. We've got banks for Christmas coming up for our loyalty members as well. And so there has been an increased investment that as you also call out. That means that members earn more, but they also are able to come and burn more in our stores. And certainly, Christmas is a favorite time for members to be able to do that. It's not just through Bank for Christmas, but through burning off the $10 off and transferring to Qantas, if you happen to be part of that as well. So look, I wouldn't put a number on it, but we've already called out that we've got nothing to share with regard to the expectations we've set on profit guidance for the year.

Okay. And then if I can just sneak one in on just how do you guys measure success at Christmas, given last year was so disrupted, particularly in Victoria. Like what is -- what are your -- like how are you targeting that? Is it versus 2 years ago? Is it a share thing like -- I'm just trying to nest to give the exact numbers necessarily, but just from a strategic perspective, the focus is there. What is the metric you're looking at? And how should we be measuring over Christmas?

Yes. Look, we're looking for continual improvement from where we are right now. So we do need to see overall improvements in terms of obviously the sales. We'll look at it, frankly, breaking it out based on states and regions because it was a very different Christmas in Queensland compared to, obviously, what we saw in Victoria in some parts of New South Wales. And so from our business perspective, with 8 weeks out now, we started our seasonal reporting, but we have also got reporting on the comparisons with the industrial action period as well just to make sure that we're really clear about like-for-like comparisons. So look, I wouldn't be able to share more than that. We see, Bryan, but yes, it does make it a little bit more complicated this year as you compare quarter 2.

The next question comes from Craig Woolford with MST Marquee.

Amanda, I'm going to switch tack. I just want a question on BIG W. Just trying to understand the moving parts in its results -- sales results slightly positive. But the average item value looks to be up quite a bit because the average -- the items were down 3.8%. I know you talked about positive sales in apparel, but items to be down that meaningfully just doesn't look like a great sign. So I'm just trying to understand the moving parts on the BIG W business?

Yes. Thanks, Craig. I'll just turn to Dan to talk through that, as we've shared, we certainly have been pleased with the clothing performance, but I know there's some detail there, Dan.

Look, I mean, the main thing to say on ASP, Craig, is that this time last year, we had a lot of units go through the P&L, especially in Clothing through winter clearance. And so those items given an item lift last quarter and taken ASP for the business down, which is obviously a very expensive thing to do. This year, we've come out of winter much, much cleaner than that. And so we are seeing kind of inflation, basically, the ASP is up on that basis. That's not on the -- we haven't raised prices to drive that ASP increase. So we have kept prices very steady and competitive it's really the cycling of clearance investments that's driving the large part of that.

And I think Dan, the other component that's worth adding is we were pleased with the start of the spring summer campaign and Clothing range and Home range. So we're seeing -- in terms of the mix of sales, more full-price sales than we saw last year. I think actually, we would say it's a healthier mix of sales, you're right, Craig. It is distorted and we have much more distortion on mix in BIG W than the other businesses in the group just because of the different category dynamics that exist. But the main driver is this health of the clothing sales that we're seeing.

Your next question comes from Richard Barwick with CLSA.

Man, my follow-up question is just actually harking back to one of the comments before. Effectively, you're saying that so correct me if I wrong, shoppers are telling you they want to reduce the cross shopping. And that's sort of their expectation as we move forward. Does that create some urgency now? So you -- if they're going to stop cross shopping, then you want them to be shopping with you now, so they're staying. Just in terms of -- yes, just some urgency and sort of lock that behavior in now if they're going to ease around back on the cross shopping, if that makes sense?

Yes, that absolutely does. And this is what customers are indicating they'd like to do, not what they are doing. So I just want to be clear on that, too. But absolutely, and that's as we've talked on this call today, we have been really focused on sharpening up our offer every day in stores right now across the board. And at the same time, really going back systematically through each one of our categories and making sure as quickly as possible. We've got better ranges available in some of those key categories where we've shared we are underperforming, and we need to do better on. We're also making sure that, when customers come and shop with us this Christmas and particularly in places like Victoria, which was so deeply disrupted last year, we want to make sure that they have a great experience. And so making sure that we've got the right team available to be able to provide that service is a big focus for us, absolutely.

And we want to see both our loyal customers, which we've got a very strong franchise around continued to shop with us, add more items to their basket and so to be able to grow that. But we also think we've got an increasing opportunity if we get it right, to be able to have some of those customers who might not have shopped with us for a little while, shop with us at Woolworths. [indiscernible]

I was going to say, part of my question is really around the urgency. So maybe if I rephrase it and said, like all the changes that you're talking about and that you have made and you are making, do you feel like the changes are being made quickly enough with enough urgency, to get them in place?

Yes. Yes, let me -- the changes that we can make in the short term, yes, I could not be more pleased with the changes that the Woolworths retail team have been making over the last couple of months and the plans that we've got for Christmas. The reality is that for those areas where we've identified some structural changes we need to make the categories in terms of range. That is important for us to have the right conversations with our supply partners, allocate the right time to be able to work through that. We need to work within the grocery code. Of course, as well, and we're very, very mindful of that. .

And so as quickly as we can, we are focused on making those improvements, but we do need to do it in the right way in a way that's sustainable for our supply partners as well. Thanks.

There are no further questions at this time, and that does conclude our conference for today. Thank you for participating. You may now disconnect.