Woolworths plans to double its Engen forecourt footprint from just over 100 sites and rebuild an online app it concedes has let customers down, as new group chief executive Sam Ngumeni reorients the group around its food business. Group sales rose 4.8% in constant currency to R84.5bn in the year to end-June, while adjusted earnings before interest and tax gained 3.2% to R5.3bn.
Growth slowed sharply in the second half, to 3.4% from a stronger first six months, which the group attributed to fuel-driven inflation and weaker discretionary demand following the escalation of the Middle East conflict. Adjusted diluted headline earnings per share rose 4.6% to R3.15 and the total dividend 5.9% to R1.99, on an unchanged 70% payout ratio. Free cash flow reached R4bn on cash conversion of 105%, with net borrowings of R5.9bn at 1.44 times earnings before interest, tax, depreciation and amortisation.
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Food carried the year. Sales rose 5.7%, or 3.7% on a comparable store basis, with earnings before interest and tax up 3.2% to R3.7bn and return on capital of 37%. Fashion, Beauty and Home was the drag: earnings before interest and tax fell 14% to R1.4bn, down almost 28% in the second half, with gross margin 1.3 percentage points lower at 46% after clearance markdowns and price investment in kids and babywear.
| Measure | FY2026 | Change |
|---|---|---|
| Group sales | R84.5bn | +4.8% |
| Adjusted ebitda | R8.9bn | +3.1% |
| Adjusted ebit | R5.3bn | +3.2% |
| Adjusted diluted HEPS | R3.15 | +4.6% |
| Total dividend | R1.99 | +5.9% |
| Free cash flow | R4.0bn | — |
| Food ebit | R3.7bn | +3.2% |
| Fashion, Beauty and Home ebit | R1.4bn | –14% |
| Return on capital employed | 17% | +60bps |
| Online share of SA food sales | 7.3% | — |
Ngumeni was unusually direct about the online business, saying internal earnings margin targets had constrained investment in the channel and that an app built on legacy architecture had disappointed customers. A digital officer role has been created to address it. The group now accepts that online dilutes margin in percentage terms while adding to profit in rands, on the basis that shoppers who use more than one channel spend materially more.
The numbers explain the urgency. Online contributes 7.3% of South African food sales and on-demand revenue grew 19.6%. Over a broadly comparable period Shoprite’s Sixty60 grew 34.5% to R25.5bn, leaving Woolworths’ delivery business expanding at roughly half the rate of the market leader.
Convenience is the other lever. Woolies After Dark, which runs on Uber Eats until midnight, operates from 80 sites and more than doubled revenue. The group has just over 230 W Café and coffee locations against roughly three times as many food stores, and fewer than a fifth of its food customers use the food services offer at all. Engen sites are to double in the medium term.
That places Woolworths in a market every large grocer is contesting. Forecourt convenience retail grew 4% to R40bn in 2024, according to Trade Intelligence. Shoprite agreed a day earlier to acquire Vida e Caffè and its roughly 400 outlets, which include Shell forecourt counters. Pick n Pay has piloted Pick n Pay Go with Vivo Energy, and Food Lover’s Market-owned FreshStop operates more than 300 sites alongside Seattle Coffee.
The frequency push matters because food volumes turned negative in the second half, concentrated in bakery and produce. Ngumeni said poor weather had affected produce quality and that stock was rejected rather than shelved. Internal price inflation averaged 4.7%, or 3.9% excluding meat.
Costs included roughly R40m in additional fuel expense, R178m of asset impairments and R247m in transaction and restructuring charges. Two security incidents disrupted fourth-quarter trade. Capital expenditure fell about 20% to R2.4bn and is budgeted at R2.2bn for 2027, excluding the pending in2food acquisition, which awaits competition approval. In the first seven weeks of the new year food sales rose 3.2%, Fashion, Beauty and Home 1.7%, and Country Road Group fell 7.7%.