Thank you, shoppers: unlike Coles, no need for shoplifting for Woolies shareholders

If, as the Reserve Bank and the business lobby reckon, there’s no link between rising profits and inflation, shareholders in Woolworths won’t care — they’ll be getting an inflation-beating 13% lift in full-year dividend after the supermarket giant revealed today a solid rise in revenue and earnings for the year to June 25.

Woolies’ revenue rose 5.7% to $64.3 billion — less than the 6% rise in the consumer price index (CPI) for the year to June and less than the 7.5% rise in the cost of food and non-alcoholic beverages. But the giant’s earnings before interest and tax (EBIT) — the key measure of retail profitability — rose 15.6%, more than twice the rate of inflation (CPI and food) to a record $3.116 billion.

Woolies tried to soften the impact of the sharp rise in EBIT by claiming that if you deduct the COVID-related costs in 2022 of $323 million (which were not needed in 2023), the rise was just 3.4%. But you can flip that and point out that not having to pay those COVID costs meant Woolies could have used those savings to knock the tops of big rises in some food areas. Instead it chose to let them go through to EBIT.

So Woolies’ final dividend was lifted 9% (more than inflation) to 58 cents a share, which took the full-year payout to $1.04 a share, up 13% from the 92 cents a share paid for the 2022 financial year, a rate of growth well ahead of inflation.

Things weren’t so flash at Coles: on Tuesday it revealed a lower-than-inflation 4.5% rise in its EBIT to $1.9 billion, with supermarket revenue up more than 6% to $36.75 billion in revenue. It pinned part of the blame on a surge in theft from its stores.

When you replace human checkouts with self-serve checkouts, thus transferring part of the labour cost of processing to consumers, and you increase the price of grocery staples at a faster rate than the CPI, you perhaps shouldn’t complain about a rise in consumers helping themselves to a five-fingered discount. But rather than acknowledge this, Coles says organised crime is behind the rise, perhaps forgetting that organised crime makes money only by on-selling stolen products to consumers more likely to buy black market products when they perceive retailers are ripping them off.

No such concerns for Woolies shareholders, though — they can enjoy dividends rising a lot faster than inflation. Thank you, shoppers.