NATIONAL supermarket retailer Woolworths this morning announced a financial year net profit of $1.138 billion, up a whopping 18pc on the previous year, while group-wide sales rose to $71.5b, a 3.6pc increase year-on-year.

Pre-tax earnings of $3.1b were up 12.7pc for the year ended 30 June.

Woolworths Marrickville Metro. 30th January 2018. Photograph Dallas Kilponen/PPR

Australian food sales – the company’s major sales and profit generator – increased by 4.6pc to $53.9b, climbing to 5.7pc over the second half of the year.

The result compares more than favourably with rival Coles’ results released yesterday, delivering a 2.8pc increase in group sales revenue to $45.7b, while net profit took a hit, rising only 1pc $1.09b after Coles set aside $235m in provisions following a Federal Court decision on historical staff underpayments.

Woolworths Group chief executive Amanda Bardwell said while the company expected the challenging economic environment to continue, with household budgets remaining under pressure, Woolworths strategy to deliver low prices and the best range and convenience provided confidence for the year ahead.

eCommerce (online shopping) was a highlight during last financial year, with sales increasing by 18.6pc. By category, Fresh Foods (including fresh meat) and Grocery Food performed strongly with improving trends in Everyday Needs. Excluding the impact of declining tobacco sales, Woolworths Food Retail F26 sales grew by 5.9pc and 6.6pc in the second half.

Media, wPay, Rewards & Services sales increased by 9.6pc driven by Everyday Rewards & Services growth and a solid improvement in Cartology (digital in-centre advertising) revenue in the second half through a focus on key clients and successful Food events.

Commenting on the outlook for the current financial year, Ms Bardwell, said it had been a pleasing start to the year in the Australian Food division driven primarily by item growth.

“Customers are expected to remain value-focused in the year ahead and we are committed to limiting the impact of rising costs through low and dependable prices,” she said.

“These cost pressures challenge us to be even more efficient, leveraging technology to be more productive in order to reinvest back into the business for our customers.

“Looking ahead, 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 first choice for customers,” Ms Bardwell said.

On Monday the retailer announced an expanded “Lower Shelf Price” range, now out to 1000 items from the original 400 launched last year, including some red meat items. For example Woolworths Beef Mince (500g) – a big seller during tight economic conditions – has been reduced from $9 to $8.50 (down 5.6pc), while a four-pack of Classic Beef Burgers (500g) – is  down a dollar to $7.50 (reduced by 11.8pc).

“Lower Shelf Price is giving customers lower prices for longer, and we’ve seen more and more people adding these products to their trolley to spend less on everyday household essentials,” Ms Bardwell said.

In commentary about the trading outlook, Woolworths said it expected customers to remain value-focused in the year ahead and the company was committed to limiting the impact of rising costs through low and dependable prices.

Woolworths Group Chair Scott Perkins said the company’s focus on the retail fundamentals had continued to see an improvement in performance and shareholder returns during the year.

• The Woolworths Board declared a final dividend per share of 52c, bringing the total dividend per share for the year to 97c, an increase of 15.pc on the prior year reflecting the increase in NPAT.