Woolworths Holdings (WLWHY) Q2 2026 Earnings Report

The call presents a constructive recovery narrative: sales growth, market-share gains across all divisions, strong cash generation, improved operational metrics (availability, inventory reduction, CRG turnaround) and continued investment in digital and customer-facing initiatives. However, margin pressure from recent capital investment (Midrand DC), deliberate price investments and inventory clearances, plus material foreign exchange headwinds and elevated depreciation, have constrained near-term EBIT and EPS growth in rand terms. On balance the company has moved decisively beyond its trough, showing multiple positive proof points and a clear pathway for improved full-year performance despite identifiable short-term challenges.

Guidance from the call was that the group is moving into a cleaner, lower‑CapEx phase with continued improvement in cash generation and margins: H1 group turnover was ZAR 42.5bn (+~6% cc) with adjusted EBITDA ZAR 4.6bn (+4.2% cc) and adjusted EBIT ZAR 2.9bn (+4.1% cc), adHEPS ZAR 1.70 (+3.8% cc; +0.7% in rands) and an interim dividend of ZAR 1.18/share (70% payout); net borrowings were ZAR 5.8bn (net debt/EBITDA 1.48x incl. leases), cash conversion 110% and free cash flow >ZAR 2bn (FCF/share ZAR 2.31, >3x prior year), with ZAR 300m working capital released and group inventory down 1.4% (FBH inventories 7% down vs Jun, CRG inventory 15% lower YoY); H2 guidance: CapEx H2 ≈ ZAR 1.2bn (H1 ZAR 1.4bn), Food price movement ~3–4% (excl. meat), FBH price movement ~3–3.5%, expectation of normalising apparel inventory and improving GP margins in H2 (CRG EBIT was AUD 14.8m in H1, +4.2% AUD but –0.6% ZAR; AUD 220m proceeds from Bourke St sale realized with ~AUD100m remaining to repatriate), and management expects continued aEBIT/aEBITDA growth, sustained ROCE (group 16.6%; WSA 25.7%; Food 41%; FBH 13.5%) and that CRG should be at least break‑even at EBIT level in H2.