Earnings Transcript for WOLWF - Q2 Fiscal Year 2024

Operator: Thank you for standing by and welcome to the Woolworths Group F ‘24 Half Year Earnings Announcement. [Operator Instructions] I would now like to hand the conference over to Mr. Brad Banducci, Managing Director and CEO of Woolworths Group. Please go ahead.

Brad Banducci: Good morning, everyone. Welcome to Woolworths Group’s half year results for the 2024 financial year. Joining me today are Stephen Harrison, our CFO who will present our financial results a little later; Natalie Davis, Managing Director of Woolworths Supermarkets; Amanda Bardwell, Managing Director of WooliesX; Von Ingram, Managing Director of W Living; Spencer Sonn, on the line from New Zealand, Managing Director of Woolworths, New Zealand; Dan Hake, Managing Director of BIG W; and Guy Brent, the Managing Director of the Woolworths Food Company. We also have our Chair Scott Perkins with us today who will make some brief remarks shortly. Before we begin the results presentation, I think you all will be aware at this stage of today’s announcement confirming my intention to retire from the role of Managing Director and Group CEO of Woolworths Group at the end of August of this year. After 8 years literally to the day in the role and as we’re going to our centenary I felt it was time to pass on the baton. And I’m proud to inform you that the new CEO designate of Woolworths is Amanda Bardwell, the current Managing Director of WooliesX. More on this in the upcoming months but I want to share a heartfelt thanks to all of you for your support and challenge over the years. Thank you very much. And over to you, Scott.

Scott Perkins: Thank you, Brad. Look, I think this is a big day for Woolies and in particular a big day for Brad and Amanda. We don’t do this often as a company; Brad’s being the 12th Chief Executive in our 100 year history. I first do want to acknowledge Brad’s contribution while he remains very firmly in the seat and charged with delivering our full year results and working with Amanda through to 1 September. It is natural to reflect on what he’s achieved and it is remarkable. Despite Brad’s insistence, on a low key approach we will of course, we internally mark all of that in due course. The Board is thrilled with Amanda’s forthcoming appointment. I believe she’s everything that we look for in the next leader for Woolworths. We think about the vision she has for the business, her proven ability to carry a team with her. And as you as you all know, in retail, the need for a relentless execution. We are very excited by the prospects of her leadership. CEO succession has been an important element of our Board work ever since I joined the Woolies’ Board when I took over as Chair in ‘22. We refreshed our future CEO criteria and have been working with our internal bench of talent on their development towards that goal. And throughout that time, we’ve been in discussions with Brad about what his plans were and what was in the best interest of Woolies timing wise. In the middle of last year, we decided to move into a different phase and commit to the planning for CEO succession with today’s date in mind. Throughout this, Brad has been flexible. The Board’s subcommittee first met on this in May actually and working with two external advisors we proceeded to do an external search and continue with our internal development, [Technical Difficulty] an extensive international search. And I interviewed a number of world class retailers, as you would expect this role does attract that caliber of leader. And against that group the Board was delighted to appoint Amanda as the best person for the job. And we’re confident, an outstanding choice. Typical of Woolies fashion, we’re all back to work focused on our customers and long-term value for our shareholders. Thank you, Brad and I’ll hand it back to you.

Brad Banducci: Thank you, Scott. And you – many of you will probably see some of the questions we had in the first session. Scott, I think you’re going dial off. So we’re not going to have many specific questions on the CEO process. But Paul and myself, if there are any specific ones, we’ll make sure that we close the loop and engage with you, Scott, as we get to questions.

Scott Perkins: Very, very happy to answer those, Brad. Thank you, all.

Brad Banducci: Now we’re going to dive into the presentation, if that’s okay with everyone. And as I do that, I would like to start by acknowledging the many traditional owners of the lands on which we operate and pay our respects to their elders, past and present. We recognize their strengths and enduring connections to the lands, waters and skies as the custodians of the oldest ongoing cultures on the planet. We remain committed to actively contributing to Australia’s reconciliation journey through listening and learning empowering more diverse voices and working together for a better tomorrow. First of all our – I am going to talk to the slides so you can follow if you want to through the presentation just from Slide 3 gives you an overview of our performance and progress on strategic agenda. Steve will then present our financials before handing back to me to finish with current trading and outlook before we move to questions. On Slide 4, the Group’s first half financial results was mixed and reflect strong results from Australian food and Australian B2B offset somewhat by the impacts of a very challenging trading environment on New Zealand and BIG W. H1 F ‘24 Group sales increased by 4.4%, with around 40% of group sales growth driven by eCommerce sales, which grew 17.8%. Group EBIT before significant items increased 3.3% with the group EBIT margin of 4.9% unchanged on the prior year. In Australian Food H1 sales increased by 5.4% and EBIT increased 9.9%. With around 2/3 of Australian Food EBIT growth attributable to WooliesX, which I will cover in the following slides. We’ve made some early progress in our transformation of New Zealand Food in the half with a very focused customer moderating price inflation and material wage inflation that’s when EBIT declined a 42% to NZD 71 million. We are confident we’re on the right path to New Zealand and have a strong customer plan to sustainably improve the performance of our business. But we also recognize that this will be a multiyear journey. As foreshadowed last month BIG W had a challenging first half up from solid trading and key events such as Black Friday and Christmas. Customers are increasingly cautious which impacted sales during the half. Lower sales together with wage inflation and current activity to main inventory health had a material impact on earnings with H1 F ‘24 EBIT of $54 million that’s 60% on the prior year. And we’ll come back to BIG W a little later to explain what we were doing to improve the performance of the business. On Slide 5, you will see a highlight from me, which is our customer scores, which have held up in the half with group VOC NPS net promoter score that is of course, of 50 down 1 point on the prior year. Product availability was particularly pleasing in the half but especially in December, as supply chains have now largely returned to pre-COVID. However, our customers’ concerns about cost of living continue to impact value for money scores especially in December and January. And it is a clear watch out for us and remains our key focus for H2. Customer care remains the highest score controllable VOC metric across the group, which I think is an amazing testament to our hard working team. Just on Slide 6. Another key theme for the half which we’ve tried to lay out there was the moderation of inflation in our Food business. It illustrates the downward trend in Australian Food with Fresh rather but Long Life inflation importantly, also moderating. Importantly for our customers fruit and veg average prices declined by 6.4% in Q2, which is driven in particular by an improvement in availability, including an increased supply of berries, capsicum, and zucchini. Meats, red meat that is was the other major contributor with prices declining 7.2% in Q2 as beef and livestock prices followed. In Long Life we’re seeing a number of supply increases requests reduced significantly compared to prior periods. However they do still remain above pre-COVID level. Just moving then on to Slide 7, while lower cost prices across some of these key categories have helped deliver lower prices for customers we have also been focused on helping our customers spend less in food, our Low Prices, seasonal Prices Dropped programs are helping our customers spend less with more and more customers shopping these programs. We also importantly grew our Own Brand range in the half including over 180 exclusive products as part of our Christmas range with Woolworths Food Company’s own exclusive brands going 6.8% in the half with growth of 4%. Importantly, during the half we also launched member prices. We did actually start it at the end of Q1 and continue to fine tune it to help in even more value for our customers. Orange Friday offers in particular, resonates strongly with customers and helps drive an increase in Everyday Rewards Members. And we will continue to build on our member plus programs on the top. The enhancement of our digital tools including best unit price filter is helping our customers save and drive an increased engagement with our digital assets and we are pleased to once again achieve a new record for our Everyday Rewards backed Bank for Christmas program. BIG W delivered great value during the key events in the period including Black Friday and Christmas. And we lowered the price of over 2,300 items that continue to fund to drive opportunities to introduce great products at low prices. A key example of this is our Own Brand toy range Somersault, which was launched – which launched more than 150 products in the half and grew strongly. Slide 8 is a reminder of our connected group and how we organize ourselves for sustainable value creation in the midterm. I’ll discuss some of the highlights in the next couple of slides. Slide 9, I just like this slide, which is why it’s in the material. It just shows you our desire for ever – for increased convenience in eCommerce. So what you see over there is the continued growth in eCommerce penetration but then within that very importantly the portion of it that is Same Day. And it is amazing to me personally that our Same Day mix reached 43% in Q2 and importantly 85% of all customer orders were fulfilled within 24 hours of order placement. In order to do this we’ve had to materially adjust the way our network worked, in particular our supermarkets. And as you’ll see on the right hand side, we’re just having to challenge ourselves continuously to move – fit into a continuous flow, order fulfillment process away from a batch process, which has been the tradition in the segment. And you can see what our – kind of times are today. But on that I think it’s an amazing testament to our team that we have a cut off time of 4 p.m. in terms of being able to get same day, direct to boot or home delivery and of course more work to do to open even more capacity into that space. We importantly opened to multi new Direct to boot sites during the half and we now have DTB as recorded available in 714 stores. We also opened our first standalone Direct to boot sites in Rose Bay in Sydney, which is an interesting innovation for us as a group and I’m delighted to develop a certification before going ahead of plan with I think 283 orders last week. Average annual traffic to group digital platforms reached 29.3 million customers in Q2, up 70% on the prior year due to the ongoing rhythm of growth in our apps. Just on Slide 10, again, a very, I guess, complex slide but again, one of my favorites. So I am allowed to have my best hits in this material, so please humor me. But what you will see on this show is just how we think about our rewards program and the funnel in which we look at it so in the context and the growth of it. Active Everyday Rewards Members reached 9.4 million customers or members in the half, with over 675,000 new members joining the program about – around 8% from the prior year. Scan and tag rates increased by 3% compared to the prior year as well. This growth reflects the continued focus on delivering personalized value. And the Rewards Member prices an ongoing enhancement Everyday Rewards [indiscernible] has really resonates with our members or customers with 2 million weekly active app users up 28.2% on the prior year. As illustrated by the chart on the left we know that as members become more engaged we can build our depth of insight to have a better value for them and increase hopefully through doing that their loyalty to our group. EverydayX also continues to grow strongly, with total subscribers increasing 70% last year, and we saw a strong uplift to paid subscribers following a positive customer reaction to our Orange Friday offer. Everyday Mobiles, we’ve taken for those who are not aware, and all of our services are put to mind in the Everyday brand. But Everyday Mobile customer base increased 30% in the half with Everyday Insurance, launched – we launched travel insurance on Everyday Insurance in December. So we’ll wait and see how that grows. But as we do these things, we’ve seen very strong resonance and growth. On Slide 11, I wanted to provide some examples of the progress within the context of the adjacencies around our B2C food business. And these are not definitive, but just gives you some sense of color and progress that we’re making. And the headline comment is we are making progress in activating our connected group, and that’s true in every part of the group. We will come back and talk specifically as we look at our retail platforms to the contribution of cartology in gross margin in the Australian Food segment at the moment. But cartology is not a new business for us. It has been around amazingly for 5 years, and it is a material profit contributor to the group. But the good news is that its growth continues to be strong, up 14.6% for the half. And just at the end of the half, we announced our new partnership with facility centers, which hopefully will leverage the capabilities we acquired through the acquisition of Shopper Media, and we look forward to adding 1,000 screens to our store network effectively about a 40% increase to the overall size of our screen components of cartology. In terms of advanced analytics, obviously, within advanced analytics for those who are not aware, it does include all variations of AI from machine learning to descriptive AI to increasingly hopefully, as we go forward, GenAI. But we have with – working in partnership with the group around 30 high priority use cases. So virtually every part of our group can be materially enhanced through the use of advanced analytics, and that’s becoming more true, not less true, I think we can all agree. But we have 30 high priority use cases underway at the moment. And the ones we wanted to call out and of course, is our next-gen buying promotions, which is the platform developed with all the supermarkets that we are now in the process of rolling out across the group, and that has led to material improvement in promotional effectiveness. We are still running a very full promotional program, and we can come back and talk about that, but we are just getting better at making sure they’re winner promotions, not loser promotions. And that is another in addition to cartology, material contributor to the GP percentages you reported in AU food. We’ll also then take in the capability we’ve built around promotions to create a broader commercial platform, and we are very actively building what we call our next-gen buying platform or the tools [Indiscernible] opticost which has given us a data driven approach to commodity price changes and been able to engage constructively with suppliers around underlying cost trends and therefore, what we may expect in terms of negotiation around prices or costs. And of course, we get more direct leverage of that on our own brands through the company. A real highlight for us in terms of importantly is Quick Assist, which has been led by Natalie Davis and her team, which helps our store teams be much more focused on data-led insights so that they can prioritize what they do in the context of their stores and amazing resonance on that. And it’s also saving our team a lot of time and getting them focused on their priorities. Just moving on from that to Primary Connect. Primary Connect in general had a very good half for us and to have productivity where it was pre-COVID in the context of material ongoing weather-related supply disruptions in Australia. I just can’t underemphasize the impact that we can find. I think two-thirds of the time, we have a disruption somewhere in Australia weather-related. So to have achieved that in that context, I think, is key. And then within that, of course, we’re working at enhancing and digitizing that network as well. And so we have a lot going on with MyPC, as we call it, and PC+ within that context, which have continued to be very effective and growing. In terms of PC+, hopefully, everyone would be aware, we took over 3 of the old Scott’s warehouses when the business went into administration. Those businesses have now been – or those warehouses that have been effectively onboarded into our platform, and we’re continuing to engage and grow our capacity into those. And we – with over 900 suppliers and carrier partners onboarded onto our digital platform during the half. We referenced our PFD sales that originally was a food company, [indiscernible] where the food company includes our own brands. I’ve talked about the growth there, but also our food service partnership with the Smith family PFD and then Greenstock, our meat business, into red meat business, which we do in partnership with Hilton. I just needed to call out that PFD had another strong half with sales growth of 8.1%, and that was supported by a whole range of activities, including new customer acquisition, but also a recovery in key segments such as cruise ships and airlines. And then last but not least, in W Living, which is a new part of our portfolio. It includes BIG W but a range of other businesses. That group is really come to life for us. Importantly, I’m sure I’ll get questions on MyDeal, but MyDeal partnership with the MyDeal executive team in particular short severance was so that we could leverage their entire capability to provide extended range into the rest of our group. It’s a priority on the BIG W Markets Plus, we call it Woolworths Markets Plus. That had a very successful half with the BIG W Markets Plus launched in November. And then you’re going to correct me, I think we now have an extended range of about 20,000 products from 50 key strategic partners. We’re not only generating good sales out of that, but it’s really helping BIG W customers get a more holistic experience when they come to our digital platform. And we’re going to get a lot better at talking about GMV as a group. Gross margin value to the net sales value, but the GMV of Woolworths Market Plus increased by 7.9% on the prior year, which I think was a testament to the team and the work that’s gone on there, and we expect, hopefully, a lot more going forward. One of the big areas that we have invested in is hopefully – well, you are all aware, I’m sure Mr. Errington is listening seriously to this, but our supply chain. We continue to progress that journey and [indiscernible] challenge given the weather disruptions in Australia and everything else that’s going on. But a real achievement for us was our Moorebank NDC has reached practical completion 2 years after the first side turn as it’s called. If we have questions on that, I’m sure we’ll come back the next month to those going forward. And we – the site remains on track to be operational in the first half of F ‘25. Hopefully, everyone has read Moorebank we have an NDC and an RDC and our RDC is also progressing to schedule with high-bay racking completed in the half and are scheduled to go live in F ‘26. Construction of our Auburn CFC in partnership with KNAPP is also progressing well. However, it is likely that the opening will be delayed until calendar 2025. So happy to take further questions on the journey there in the Q&A session. Then just moving – keeping moving to Slide 14. Obviously, we should get questions on Moorebank New Zeland and BIG W. The financial results clearly are below our collective aspirations. But despite that, we have made good progress in terms of fundamentally transforming both businesses for the future. And I just wanted to call out some of the highlights. And Woolworths New Zealand, as of the end of the half, we had rebranded 34 countdowns to Woolworths New Zealand. I think the number, as I talked today, is 43, it actually might be 45, but a little bit nervous. But what’s important to me is that when we’ve done the rebranding and we’ve reactivated the store, we do see a sales lift and we do see a customer and a team work lift. And so what the rebranding is doing is giving us an opportunity to profile the amazing value in our stores as well as reengage with our team on what’s important to them and that is very pleasing because we know when we do the right thing for customers and team, we will see sales as an outcome of sales growth. We have a plan to transition another 40 stores during the half. And I think Steve, it’s fair to say, we’re well ahead of that and we’ll probably do a lot more of that in the half just given great progress. In New Zealand, we’ve also reset our price mechanics and we an invested in price in the half, which has led to an uplift in value for money scores, which is terrific. And we are starting to see a size of our customer basket grow, and that’s also reflected in our unit volume increases and particularly in the first 7 weeks. Everyday Awards is now testament program. We launched it on the 1st of February in New Zealand and transitioned our Onecard customers into Everyday Awards with over 2 million members transitioned as I speak and really importantly, at 150,000 new members joining the program, that weren’t in the Onecard program. In New Zealand, we still have a major opportunity in the e-commerce space and extending our leadership in this and will continue to drive for convenience is key. And we launched MILKRUN in New Zealand in the half, and it’s now in 32 stores with – and really showing great growth. And our earnings out of moving from pickup extend service desk to a Direct to boot have now been also replicated in New Zealand. We have 12 stores now with a new Direct to boot build-out and great resonance with that. In terms of New Zealand, improving our Fresh offer, it’s a priority everywhere, but particularly in New Zealand. And we’ve been investing, as we’ve talked about our Auckland Fresh DC before. But it’s nice now to have our Christchurch Fresh DC openers – opening in March so that we can make sure that we deliver a great fresh experience across the whole of New Zealand. So those are some of the highlights. I’m sure we’ll come back to some of the trading and [indiscernible] to help answer those questions. BIG W, look, we did trade very well in key events is how we actually manage outside of those events, within a very cautious customer. We – the highlights for us there are just incredibly strong continued customer resonance with the business. It’s very pronounced. And actually, when we look at the topic of value, we now have market leadership on delivering value, which is price as well as longevity of product, which is the first thing for us. So we’ve now got to translate that into sales and sales resonance and I can come back to it. But we feel we’re in a good position there. We have a whole series of exciting initiatives landing in Q2. This includes the ongoing transformation of our clothing business to improve our customer offer and as we’re getting much better at managing size-based allocations to stores. And Dan can talk about that as well as, of course, our Own Brand offer, I alluded to earlier and our Somersault range in particular, which is having great resonance in the toy category. The learning’s we’ve had out of – used in wiq to partner with [indiscernible] markets have been replicated back into all parts of our business, but in particular into BIG W and really promising early results in terms of our promotional replication of what we’ve learned at all supermarkets and is leading to much more effective clearance as well as having improved cluster. Finally, and certainly not least, I’ve alluded to investments in our digital assets and particularly with BIG W market really helping that overall experience, but a lot of upside, I think we still haven’t seen going forward. On both of these when we talk about the outlook, of course, we do expect it to remain challenging in the second half. But the key focus from us inside our business is just keeping focus on building a stronger business, and we are confident that we will achieve the results we want over the medium-term. Slide 15. Just some of the highlights of sustainability. Very important just to highlight what I think this is a great page there are scenarios for improvement. Group severity rates had a material ongoing improvement in the – in the half. But in the context of group’s severity rate, we’ve seen an increase in TRIFR and we needed to call that out. It’s become a key focus for us. We’ve agreed with our Board, we’re actually going to include TRIFR as one of our step metrics for the year so that we make sure that management is not only [indiscernible] rate, but on TRIFR in the context of the year. So more work to do there and a whole ton of work underway, in particular, just manual handling injuries. Our Scope 1 and 2 emissions at our 40% below 2015 levels, another 11.6% reduction in the half. Solar panels continue to be rolled out 9 supermarkets, 5 BIG W, 2 distribution centers, 257 sites we now have across Australia that have – and New Zealand with sale all out, which I think is amazing. Reducing Food Waste and Hunger initiative really does considerable steam. We’ve delivered over $11.5 million to our charge partners in the half, including the world’s largest food bank FareShare and the Salvation Army in Australia and New Zealand, and this has leaded to hopefully, the equivalent of, well, [indiscernible] 18 million meals provided to those in need, and importantly, food diversion from landfill. A program, we don’t talk enough about is our Mini Woolies program. We achieved our 50th store opening at Coreen School in Blacktown during the half. Myself and [indiscernible] she personally attended what was one of the most, I would say, emotional days I’ve had at Woolies. And it’s just terrific to see how we work in a partnership with schools with these amazing children with disability to help them engage and get life skills. And hopefully, many of them come in to work at Woolies is our great hope. And so as I speak, we now have 52 Mini Woolies. And by the end of F ‘24, we plan to open another 28 in Australia and our first two in New Zealand. In Own Brand, we reduced over 50,000 tons of virgin plastic, which is a 29% reduction on our F ‘18 baseline. And pleasingly, we’re also named Australia’s healthiest supermarket Own Brand for the fifth year running, supporting our broader commitment to making healthy food more affordable. That’s enough for me. Steve, I’ll pass over you to dive into the financials, and I look forward to coming back and talking about the trading outlook.

Stephen Harrison: Thanks, Brad, and good morning, everyone. I’ll start on Slide 18 with the F ‘24 half year results summary for the group. Group sales for the half increased 4.4% to $34.6 billion, driven by solid sales growth from Australian Food and Australian B2B offset by more challenging trading results in New Zealand Food and BIG W. Group EBIT before significant items increased 3.3% to $1.7 billion. Australian Food and Australian B2B were positive EBIT drivers. Other segment net costs were below last year, while New Zealand Food and BIG W EBIT declined in the half. Group EBIT margin before significant items was 4.9% broadly in line with the prior year. Group NPAT attributable to equity holders of the parent entity before significant items increased 2.5% to $929 million, with EBIT growth modestly offset by higher interest and tax in the half, and I’ll discuss our dividend later in the capital management section. Turning to Slide 19, our group trading performance. In Australian Food, total sales increased by 5.4% to $25.9 billion with sales moderating over half one as the inflation continued to fall. Others returned to modest growth in the half driven by strong eCommerce growth. Australian Food EBIT increased 9.9% with two-thirds of the Australian Food EBIT growth driven by WooliesX with store EBIT margin stable in the half. In Woolworths Food Retail, which is our stores and eCommerce business EBIT increased by 8.2% in half one, largely driven by the growth in eCommerce profitability. WooliesX profit increased by $96 million to $168 million in half one, an increase of 132% with the profit margin increasing by 186 basis points to 4.1%. Australian B2B sales for the half increased by 2.8% and EBIT increased by 45.7% with comparisons to the prior year, benefiting from the exit of the Summergate business and the international businesses announced in the prior year and cycling of meat sales. PFD’s trading performance remained strong with 8.1% sales growth in half one, driven by new customer growth and growth in key segments, including airlines and cruise ships. New Zealand Food sales increased by 2.3% in the half and EBIT declined by 42% to NZD71 million, reflecting the highly competitive and value-centric market, moderating price inflation and material wage inflation. As announced last month, we recognized a NZD1.6 billion impairment of goodwill in the half, which has been treated as a significant item. BIG W also had a challenging half with sales declining 4.1% and EBIT down by 60% versus last year, impacted by ongoing customer adjustment to cost of living pressures, most evident in the more discretionary categories, particularly in home. Results were also impacted by cost inflation and higher clearance activity as we carefully managed autumn/winter seasonal clothing through markdowns, ending the half with lower inventory versus the prior year MVW. Our Other segment includes group functions such as property, group overheads and Woolworths Group’s investments in Quantium, MyDeal and Endeavour Group. The segment recorded a loss before interest and tax of $68 million, down 20% on the prior year. This reflects the benefit of lower advanced analytics costs in the half and higher proceeds from property sales in the prior year, offset somewhat by lower contribution from Endeavor Group, reflecting our lower shareholding in the half compared to last year, following a partial sell-down of our Endeavor space in December 2022. The group reported non-cash to dividend items of $1.7 billion related to the previously mentioned impairment of goodwill in New Zealand Food and a mark-to-market loss of $209 million on our investment in Endeavour Group following the assessment the group no longer has significant influence in Endeavor Group. Moving to Slide 20 and our balance sheet metrics. Average inventory days were in-line with the prior year with reductions in Australian B2B and New Zealand Food average inventory days, offset by a modest increase in BIG W average inventory days in the half. However, BIG W’s closing inventory days and dollars declined on the prior year due to the prudent management of inventory and positive seasonal sell-through in Q2. ROFE increased by 78 basis points compared to F ‘23 and was up 148 basis points on half one F ‘23, largely driven by higher group EBIT. However, Group ROFE also benefited from the New Zealand Food goodwill impairment in the half. Excluding the New Zealand goodwill impairment, ROFE would have been 15.3%, up 110 basis points versus half one F ‘23. Slide 21 is a reminder of our capital management framework. During the half, we generated strong cash flows, which were reinvested into maintaining our assets, increasing dividends to shareholders as well as growth initiatives and a small reduction in debt. I’ll explore some of these further on the following slides. If we move to Slide 22 and our cash flow statement, the group generated operating cash flow of $3.4 billion in the half, an increase of 18.5% from the prior year driven by solid EBITDA growth and net working capital inflows. The improvement in working capital in the half reflects an increase in payables due to volume increases, inflation and later purchases in the prior year with inventory well managed across the group, broadly flat versus December last year. Cash interest costs increased 7.5%, largely driven by higher floating interest rates on bank debt. Tax paid increased by 20% compared to the prior year, driven by higher taxable income for F ‘23 paid in half F ‘24. The cash flow on operating – sorry, on investing activities increased 42% to $1.2 billion. The increase was a function of the prior year, which included the proceeds from the partial sale of the group’s shareholding in Endeavor Group in December 2022, offset somewhat by the MyDeal and Shopper acquisitions. I’ll provide more detail on CapEx on the next slide. Finally, our normalized cash realization ratio, which excludes the non-cash significant items previously discussed, was 111% benefiting from the favorable working capital movements offset somewhat by higher interest and tax payments. Moving to Slide 23, which covers CapEx. Operating CapEx for the half was $907 million, down slightly on the prior year. An increase in productivity spend was offset by a reduction in growth CapEx. Growth CapEx was down on the prior year, driven by a decline across all categories, in particular e-com and new stores. Investments in productivity initiatives increased in the half as the group focused on mitigating higher inflation in F ‘24 and included the continued rollout of electronic shelf labels as well as scan assist across the store network. The implementation of double welcome gates and front of store upgrades. CapEx also includes $49 million on projects with strong sustainability benefits in areas such as refrigeration, transport decarbonization and solar. There’s no change to our full year guidance with operating CapEx expected to be around $2 billion. Moving to dividends and funding on Slide 24. The Board today approved an interim dividend of $0.47 per share, an increase of 2.2% compared to the prior year, in-line with the NPAT growth for the half and our typical dividend payout ratio for the first half. Turning to debt. Net debt-to-EBITDA was 2.5x at the end of the half compared to 2.6x at the end of F ‘23. However, we completed our investment in Petstock on the 3rd of January, which will add approximately $1.1 billion to our net debt balances, including leases in the second half. We remain committed to a solid investment-grade credit rating and have significant headroom under our current ratings of BBB from S&P and Baa2 from Moody’s. In October 23, the group issued $450 million of domestic medium-term notes with a tenor of 7.5 years. Proceeds will be used to refinance $400 million of domestic medium-term notes maturing in April 2024. Thank you, and I’ll hand back to Brad.

Brad Banducci: Thanks, Steve. Just on Slide 43. Turning to our current trading outlook after the first 7 weeks. Sales in the first 7 weeks have continued to moderate, reflecting lower inflation and of course, a more cautious consumer. Given the impact of timing of New Year’s Day on a relatively short reported period, we have disclosed the New Year’s Day adjusted [indiscernible] was in last year this year and so in the first 7 weeks. In Australian Food, Woolworths Food retail sales increased by approximately 1.5% for the first 7 weeks impacted by both inflation and also reflected in lower item growth. While underlying cost inflation in H2 is likely to remain high. We have a strong productivity pipeline for the remainder of the year and into F ‘25. However, EBIT growth in H2 is expected to be below H1, which given the price deflation we see an elevated cost inflation, I don’t think should come as a surprise to anyone on the call. We look forward to questions on that in the next section. New Zealand Food sales for the first 7 weeks increased by approximately 1%, while we see early progress in our transformation, it will take some time to reach full potential. With the launch of Everyday Awards and the ongoing rebranding, we expect transformation costs of $15 million to $25 million in H2 with H2 EBIT as with food expected to be below – a rate to EBIT in dollars actually on percentage expected to be below H1. And BIG W sales have declined by approximately 6% for the first 6 weeks – 7 weeks. We expect to see an improving sales trend in Q4 as we begin to stock material sales declines in the prior year and as new initiatives land, which will be more in Q4 than in Q3. However, as I hope you all aware, H2 is typically a low profit half for BIG W in the stage except we expect EBIT in H2 for BIG W to be around breakeven levels. Other costs are expected to be $200 million to $220 million from fully expected excluding Moore’s group contribution from Endeavor Group and Petstock Group. H2 will include Petstock for the first time, EBITDA is expected to be $60 million to $70 million for H2. Managing costs of living pressure remains a key issue for our customers, and we need to work ever harder to deliver value and help our customers to continue to spend less every time they shop with us. We will also continue to invest in our teams and platforms to strengthen the group and deliver long-term sustainable outcomes for all of our key stakeholders. As always, I would like to finish by thanking our hard working team for their commitment and focus on building a better tomorrow. And I will now turn the call over to the operator for questions. And can I ask that you limit it to one question per person to allow everyone to have a turn.

Operator: Thank you. [Operator Instructions] The first question today comes from Tom Kierath from Barrenjoey. Please go ahead.

Tom Kierath: Good morning, guys. I just want to ask on the cost growth in the Aussie food business, 9% is a pretty big number, probably the biggest number you’ve reported outside of kind of the COVID period. I had thought that there’d be some RT3 benefits coming through in the half. Can you maybe just talk through those and maybe give us some color outside of the, I guess, the labor cost increases that have come through because, obviously, the 9% is well ahead of the labor cost increases that we’ve seen. Thanks.

Brad Banducci: Thanks, Tom. A really good question. I’m going to get Steve go in the detail, I just make some contextual comments. Hopefully, everyone is aware of the wage increase that we had with 5.75% needed by our team and then 0.5% of super. So you’ve got about a 6.25% underlying wage increase. And of course, the number of other costs went up. Then we’ve also got the item growth as you will be aware of on top of that [indiscernible] and then very importantly, while eCommerce did amazing thing for our GP percentage mix because you just get this bigger basket that’s got more long-life products in it. Some of the costs of actually picking that are in the CODB. So that’s a material pressure in CODB that it’s not easy to back sell when you look at it as one line. But in terms of the rest of the things going on in that CODB I will turn over to Steve.

Stephen Harrison: Thanks, Brad. I mean, Tom, it’s a fair question. When we look at it, you’ve got CODB growth of about $480 million or excluding depreciation, about $400 million of cash increase. Just under half of that is the wage inflation. So 6.25%, when you include super it’s a very big number for us. The other key drivers that I think it’s worth just building on Brad’s comments, volume grew in half, so it was great to be back in volume growth. We opened a number of new stores and e-com grew very strongly at over 20%. And the combination of those volume and mix drivers is worth about 40% of the gross cost – cash cost growth. We did work very hard on productivity, and we feel like we generated a reasonable amount of productivity in the half. But as we flagged back in August, we always thought it would be very challenging to offset the level of inflation that we were expecting in the current year. And I think just a couple of other bits of color. We do have spend on a number of areas in our business, including our investment in cartology and in week that sit in our side every line that drive both revenue and margin benefits. And we also did see inflation in a number of other areas, including energy costs, which were up material as well as inflation on labor-related spend into including contractors and repairs and maintenance. So we’re very sensitive to the need to manage our costs, and we have a very full productivity agenda and working very hard to drive more productivity in the second half.

Brad Banducci: So just on that productivity agenda, alluded in the second half, Tom. We actually had a very good half in terms of molding momentum in that productivity agenda, and we’re actually ahead of where we expected to be at this point. But obviously, as with all these things it does sort of build over the context of the year, so it does sort of ramp in the second half. And that becomes a key wraparound into our F ‘25 plan. And so it is not an immaterial agenda. But it’s an agenda, not on just slashing costs, but on fundamental improvement in what we do, and we can come back and talk about.

Stephen Harrison: And probably my one build back would be we’re agnostic about where the productivity falls in our P&L, right? So a number of our initiatives are driving stock loss improvement. If you think about our investment in assisted scan or double welcome gates, they manifest in the GP line, but they are productivity initiatives the way we do that.

Brad Banducci: And we’re reflective in the CODB. Thanks, Tom. Good question.

Tom Kierath: Thank you.

Operator: Thank you. The next question comes from David Errington from Bank of America. Please go ahead.

David Errington: Good morning, Brad. Good morning, Steve. Brad, just before I start, I’d just like to make a comment that I’ve really enjoyed you as an MD. I think you’ve been a wonderful CEO for Woolworths. I mean most people on this call should remember, if they don’t, they should be reminded, when you inherited Woolworths, it was a basket case. And more importantly, what you’ve done is you’ve not only turned this business around to be back to where it normally should be as a leading supermarket business, but you’ve also got humility into the company. Previously, the management was very arrogant. That was on the public record. I think you even admitted that. And what you’ve done as a CEO is you’ve actually brought back humility into Woolworths, which I’ve really enjoyed. So I’ve really enjoyed you as a CEO, and you’ve been responsive to any challenge coming your way. So congratulations, and I hope your legacy goes very, very warmly. Now on that, we can’t go without a slap. The productivity and following on from Tom’s question, which I think is what’s concerning me, I suppose, is this cost increase, but with no fallback in CapEx. And what really concerns me is this growth CapEx is falling $283 million back to $200 million and sustaining CapEx is increasing. And we haven’t seen an improvement in the cost. Now I know you articulated very well to Tom’s question, the cost of doing business is really challenged. We’re not seeing any improvement from that big investment that you made on Slide 13. I mean, that is a huge amount of investment that you’ve made. And yet I’m concerned that your outlook statements on your productivity, etcetera, we’re going to be having to expect at least 5%, maybe 6% cost of doing business growth whilst you’re still spending $2 billion of CapEx. So what’s your vision for the next 3 years that we can expect as investors? Because I’m just worried that this is just a cost, not an investment.

Brad Banducci: Yes. Thank you. Thanks, David. Look, I mean, I think as Steve articulated, I think at the segment level, CODB it’s not logically in my mind. We do it because you’ve had it forever. At the group level, it works out but there, we’re always trading off we’re just trying to make the right decisions and drive value. And often, those values are manifested in GP not here, and we’ve taken the cost in CODB, and that’s part of what you’re seeing right now. And it’s all about how we drive value and therefore, how we drive value for our customers. We’ve been highly price competitive, but also then balance it out against our shareholders. If I then look at that issue, we’ve been working very hard on it. And I look at the team at the table that sitting with me, we have our most meaningful productivity pipeline we’ve ever had in the context all through, and we’re tracking ahead of it, and we will and need to add lever on it because realistically, the wage increase would own resolve from our team, it was needed. They are key customers who have key value issues and more about this balance. We can talk about one thing, but we’re the biggest employer in this country, we have an immense obligation to do the right thing for the people who work for us. So we are working on the productivity to offset the wages. The plan does look very robust and good and we will continue to execute against it. RTI to Tom’s point is an underlying platform to deliver the change effectively to the store is how it sort of works. And as I say, we feel very good about that. In terms of wage, price inflation, it does need to come down, David, it is. So we won’t get into the negative jaws, which you understand, which is essentially our costs are driven by items. But – and if the cost of the average item comes down, it puts a lot of pressure into the P&L. So that will be a challenge in the next 12 to 24 months. Outside of productivity, the thing that offsets that, of course, is the profit growth out of our adjacencies, which become key. And I can’t underestimate to you all the critical contribution of, as I say, cartology, how we’re going to use wiq, PC+, which is our extension of providing supply chain services to supply partners and hoping them to be more effective, but also, of course, getting a fair return on the way through. And we are going to be a lot more disciplined outside of that on other investments in the group. I think it’s unavoidable. Including, I would have to say to you, above store, we are – just like every other corporate in this country right now leaning to the issue around how we want to manage our digital costs and investments, and you can expect extreme prudency in the context of this half and into F ‘25. Specifically on the supply chain, it is starting to deliver for us, David. Our productivity is very, very strong. The issue we’re still having is really disruption costs that are still playing through. But hopefully, those some ways we get better at managing those. You will see a whole lot of mass leverage come out of it and yes I’m looking at you as I talk. And hopefully, the cost that we’re all dealing with right now is elevated transportation costs and that’s on the back of retaining truck drivers as well as fuel. So hopefully, we’ll start to see that balance off. So I don’t feel unconfident, David, in the mid-term, and we’re always trying to play for the mid-term, but it’s going to be a relatively painful transition from a world of price inflation to a world of elevated wage or input inflation and very muted price inflation. And we shouldn’t – we don’t reserve from acknowledging that.

David Errington: Thanks, Brad. Thanks for your answers. And the CapEx, just was the growth CapEx is falling and the sustaining CapEx is rising.

Brad Banducci: Steve, outside of how we split GPFC and DBI, I think we can improve how we articulate this issue my good colleague, Mr. Harrison knows, and I’m going to pass to him to talk about that.

Stephen Harrison: Sure, David. I mean just by way of explanation, we have consciously invested more in productivity initiatives in our capital in the half in the knowledge of the wage inflation that we have now. The implementation of those initiatives generally doesn’t deliver a full benefit in the half, we get them in subsequent halves and years. So productivity going up is a conscious choice. The shift in mix in some of our growth capital is really just to do with the timing of some projects and the projects coming – having larger spend in the first half of last year. So in particular, in eCommerce, we had a lot more spend on automation in the first half of last year on our Auburn CFC. We had the completion of – the replatforming of our rewards platform or a real-time loyalty program that ended in the prior year. And the timing on new stores is just very cyclical based on just where the development cycle is out. And we are just seeing some delays in new stores coming through just with the pressure on both cost and interest rates on developers. So I would see those as timing related primarily, but a conscious choice to step up productivity investment.

David Errington: Okay, thanks, Brad. Thanks, Stephen. Well done again, Brad.

Brad Banducci: Thank you, David.

Operator: Thank you. The next question comes from Michael Simotas from Jefferies. Please go ahead.

Michael Simotas: Good morning. Before I ask my question, can I just echo Erro’s comments. I think most people on this call, Brad, would agree that you’ve left Woolworths in a much better place for shareholders, staff and customers. And congratulations, Amanda. My question is around margins in Australian Food and your comments that the split between gross margin and CODB are not necessarily the intuitive and not lost on me, particularly given the scrutiny on supermarket pricing right now. Can you talk a little bit more about the drivers of your gross margin during the period? You’ve given us some color on tobacco. Just be interested in what the impact from the adjacent businesses was, business mix, efficiency, stock loss, etcetera, just so we can understand the benefits of the investments that you’ve been making and as they’re coming through that gross margin on, please?

Brad Banducci: Yes. Thanks, Michael, and I’ll start, and then I’ll pass on to Steve. Thank you for your kind comments. Legacy will be defined on how we perform in the next 3 years, not in the past 3 years, and that will be defined by everyone at this table and how we deliver for our shareholders in the mid-term. So I’m confident in the team and I am confident in their ability to do that. So that, I think, will be the metric. In terms of our gross margin, let me take the things off the plate that aren’t material, if you don’t mind, Michael, and then we can come back to things that are actually a flat stock loss on room board terms, which was a good result, can I just say, given the challenges in stock price. So really flat. So we just kind of want to take that one off the table right up front. Of course, tobacco continues to materially decline as a percentage of our mix, going forward would actually start plateauing, but it’s not. And then with the CPI increase on tobacco, it’s actually creating more of that distortion wide, quite a meaningful movement in mix. And you just need to just park it just a very different issue with very different dynamics associated with it. So I think just park that. Then you get back to really all of these adjacencies and are starting to deliver for us as they should. We’ve invested materially in CapEx but also in our P&L. So they’re starting to deliver, they had been starting to deliver for us, got a bit clouded in COVID and now you really seen it come through strongly, which is terrific. And if you look at, Michael, just to bring it to life, you can see we break down for [indiscernible] in the numbers. So if you look at eCommerce, right? And we had a very strong debt and you are looking at the performance here in eCommerce, a material lift there. Now that caused some issues in CODB because there’s no question across the lot to pick it, but you see the benefits in GP. In particular in GP, what you see is the benefit of a very broad basket versus a narrow basket. And so when you get to these 40, 42 items you’re picking up a lot of non-food, Long Life products in there, and they tend to be higher GP mix. So you see the material mix movement come through and the benefits of that basket build, which has been a particular focus of the team. How do you build a profitable basket, which is the key in eCommerce. So you sort of are those distortions, but there’s no question on the strength of performance of all of those businesses sit in our deck, starting with eCommerce. The real achievement in the basket, we managed to actually grow the basket and materially improve the basket mix through personalization and a whole range of things that we can talk about. Our biggest in productivity, individual productivity improvement in the half was how our store teams actually managed picking. And that was through all the work done by wiq and the way we route pickers and how we consolidate orders. And it was, as I said, literally, the biggest individual process improvement, which happens going forward. So we sort of got the double leverage. And then the third one we’ve got – and it’s still early, we’re really excited about this is with our new last mile fulfillment business home run, how we manage the mix between trucks and crowd. We are just starting to see some amazing results that we need to work hard on delivery in the second half. So I know you wouldn’t have had the time to digest – get that number here, but Mike, if you get it, you will see that. So that’s eCommerce. If you look at Everyday Awards, it’s just continued to grow and of course, benefit from all the partnerships that we are starting to have, which is terrific. Some of those costs are reflected in the individual businesses, but you see them and they’re reflected actually from gross to net sales. So not in the GP, they’re effective we’re reducing gross to net sales and then we’re taking profit from Everyday Awards into the GP line. But then the range of services there, it’s so important to have a subscription business – we now have hundreds of thousands of people in subscriptions and you’ve seen the benefit of that sitting there. Early days but I will tell you on Everyday is true, but really pleasing results and pleasing for our customers as much as it is for us, our members are resonating with it. As I said, to rebrand our telco business and get the growth that we did, and that was probably [indiscernible] in October, right, that we rebranded or maybe even November. So – and the reason we did that was we can be more personalized at providing those offers to members is what we’re doing. So it’s fun to see that really worked for us. And then things like wPay, we don’t really talk about really last half out of it. So you really see just some great movements in there. And then in the supermarket business, the great achievement is actually with a very muted item growth, basically zero item growth at a store level to have delivered the outcomes of debt and the cost management was excellent in supermarkets through productivity and RT3, it was more the investments we laid on. And so you see you’ve seen that go through. And also you’re just seeing what you’re seeing in supermarkets. And I do want to come back and talk about it, I should be asked a lot of questions about where the item growth is going or not. The real issue that’s happening in our group is our food businesses are doing well, but all the non-food categories have become incredibly competitive across the market. This is an inconvenient truth for anyone who wants to talk about lack of competition that’s extraordinary, but we’ve got very high item growth in our grocery food business, which is helping the mix of the numbers that you have seen in what we do. So, those are the broad color pieces. Steve will do a much better job of breaking it up forensically.

Stephen Harrison: Thanks Brad. Look, I will try to be brief just to build on your comments and not repeat too much. But roughly a third of it, Michael, is coming from our media and service income in Cartology and WooliesX. So, Cartology continues to grow strongly and Brad referenced a number of the service businesses. If I think then about some of the other levers that we tried or drivers that we have described in the profit announcement, we will continue to leverage wiq and advanced analytics to drive better promotional outcomes and reduce promotion – unprofitable promotions. We also cycled the collectibles program in the prior year. And so the combination of those next two is worth roughly another a third of the – and so just as I have described it, I am talking to 76 basis points, 78 basis points, not the 96 basis points because of tobacco is ultimately gross profit dollars that we don’t have, but it does drive a basis point improvement. And then finally, the balance is from a range of things. Long life grew more strongly than fresh. And in our business, long life is a higher-margin category. Actually, a lot of that fueled by the growth of eCommerce, where there is a mix orientation towards long life more so than the in-store shopper. We have been working hard on achieving sourcing improvements on commodities, particularly supporting our own brands. And we have also been working hard to improve into end-to-end economics of meat, and in particular, partnering with Hilton to drive production efficiencies in their factories that supply our stores. And pleasingly, we are actually able to pass on falling livestock prices to lower prices for customers in red meat, which is really important for us. And so hopefully, what you get from that description is a lot of the improvements are things that are within our control. We are very focused on dilutive value for our customers. And there is a number of levers, and I am sure Natalie or Brad could talk to them that we are particularly focused on in both the first half and moving forward on how we continue to drive value for customers and where the opportunity arises and where we get a lower cost of goods that we pass on a lower price to the customers.

Michael Simotas: Thank you. Very well answer to the question mark, but…

Operator: Thank you. The next question comes from Shaun Cousins from UBS. Please go ahead.

Shaun Cousins: Hi. Thanks. And Brad, I concur with Mike and Dave regarding the work you did culturally, particularly in the first role that you had in Australian Food came at a time when Woolworths had put the – had not put the customer first and trade feedback had definitely been that arrogance rather than humility was the culture within the organization. So, I think that the culture is better for your tenure. Maybe just to touch on volume, if I can, why are you seeing such subdued item growth and it even moderated or we did in the second quarter to 1.2% relative to 1.6% in the first quarter, below population growth, is it loss of share to Aldi and also maybe touch on some of those non-food peers like Chemist Warehouse, Bunnings, is it Amazon, or are you still seeing sort of strength in eating out? I know PFD is up 8%, but that’s a combination of new and existing customer growth, so why is your item growth not better, please?

Brad Banducci: I think it’s a great question. Shaun, what – you will see in the announcement, by the way, I finish up as CEO and I intend to be a very active one until the end of August and make sure I represent Woolworths in all these various forums. I agree with main stream my last few weeks working in a store, and I invite you to join me there. I know your passion for it. And so I am going to work in [Technical Difficulty] and I would like you to join me. And I think we can have some fun together, we might do in the productivity of the store of course. Item growth, which is a big issue, as I say, it is an incredibly competitive market. Customers, it’s already the most cross-shopped market in the world, in the Western World where we can get data. And that level of cross shopping is increasing and you would be well aware with the material penetration in particular of Aldi together with Coles in local geographies, starting or finishing at an Aldi and it’s going up and not down. And that should not be surprising. And therefore, we need to work incredibly hard at retaining that customer and retaining the basket. So, what happens as you well know, as you lose a portion of the basket, not the total basket, but it goes up over time. And we are working very hard, as you can imagine, on this issue. So, I think that’s it. But it really is – then in non-food, which is where the issue is, it’s all the everyday needs categories as we recall it, whether it’s home care, personal care, pets, baby, where you see this intense competition across the whole market and everyone has leaned into the market. I always would like to go and spend a Sunday in a store before we do results, and I will put that on Saturday, and I was hanging out as I tend to do outside of Coles. And the local pharmacy with that was not only everyone’s got into toilet paper as we well known. But they were sitting there selling dishwashing detergents and a whole range of categories that are just not logical back to obviously, but they are looking for traffic builders, additional items to add to the basket. And you see everyone do that. A particularly pronounced version and I think they are doing a fabulous job, of course, is the warehouse. And you have seen the manifestation of the focus they have got on those categories and how it’s playing through. So, this market is unbelievably competitive, it’s an inconvenient truth to many, but it is statistically, unequivocally true. The traditional competitors are getting more competitive, but then in food and everyday needs, essentially, you are seeing virtually every retailer getting to these categories because it drives traffic and basket for them. And that includes BIG W. So, when we talk about BIG W, we will be talking about some really positive trajectory in bulk lines and everyday essentials, which is happening. So, we are doing it in the context of our own group. It’s good for competition. It’s a very important part of the overall basket. It’s where we see the most price inflation. Everyone wants to talk about price inflation, then we will get numbers that are thrown around, which are very temporal in nature. The big issues have been things like a dishwashing tablet being at a shelf price of $1.64. And so there is lots of price pressure there, very expensive items. And therefore, that competition is good for consumers. We just need to be more focused and execute to hold our share of item growth in that. So, that is primarily what’s driving it there many other overs and unders, as you might imagine. One of the great things I have been able to, as Matt would point out to me, to reduce prices in fruit and veggies that we get we get volume elasticity and particular in fruit. So, that started to come off a little bit, but that’s the major driver.

Shaun Cousins: Sorry, Brad, are you holding share in item growth, or are you losing share in item growth? Sorry, extra color, that’s the question.

Brad Banducci: In the last seven weeks, Shaun, it’s very messy to be unequivocal. We are holding channel share in item growth. As I have said though, if you look at [indiscernible] in everyday needs, we are losing, I think market shares. We can’t calculate it for you. But we are holding channel share in everyday items and the overall channel share is sort of in the right realm, it’s a very noisy time of year, as you know. But broadly, at a volume level, we look okay. But in an overall market, there is no question in everyday needs we are losing share to rest of market as a supermarket industry as much as is stores [ph].

Shaun Cousins: And no share loss due to the Australia Day issues?

Brad Banducci: No. That doesn’t mean we can’t learn from what happened. We know we can do a better job and I publicly acknowledged that. We will come back and be very thoughtful in how we respond and how we operate going forward. So, we know we could have done a better job of that, but no, that hasn’t really impacted us. It would be fair to say the announcement of the Senate inquiries have led to a material drop in overall reputation and brand NPS scores for the major supermarket chains in Australia. That has been the major factor on the continued press on the way through. But we had some customer segments that, yes, we could have done a better job of making feel welcome and recruited at our business in Australia Day and we will address that going forward.

Operator: Thank you. The next question comes from Adrian Lemme from Citi. Please go ahead.

Adrian Lemme: Hi. Good morning and congratulations again, Brad, the turnaround you executed at Woolworths and also, congratulations to Amanda on your appointment. I was just going to ask a question on New Zealand, please. I have heard of there being a material increase in 50% off type promotions on front-end displays compared to the more typical 20% to 30% off in that market. Can you talk to how much of that extra discounting? Is it actually being funded by Woolworths? And are you seeing a payoff yet from this investment, please?

Brad Banducci: Thank you, Adrian. We have just been in replicating the learnings from Australia much more deliberate and intentional on the end and the delivery of value through the end and it’s resonating very well. So, we often have these promotions across the store and also we can fragment the message on an end and we are just being much more deliberate on getting the right messaging on it. So, that – what you are seeing is as much a merchandising issue as a change in strategy. That said, we are investing materially in our own brands in New Zealand, and you are, therefore, seeing huge ASM growth, but it is causing us short-term margin and price pressure, but it’s the right thing in the context of an even more challenged market in the value set in Australia. So, as we know with Australia, you have got to invest in the customer, get the resonance and then you can really build from there, and that’s happening and working. Look, when you look at the overall results for the half, it is reflected in the overall performance of the half, but I wouldn’t call something out that’s dramatically different in the last couple of months. Spencer, I know you are online. I don’t know if there is anything you wanted to add to that?

Spencer Sonn: No, I think you have covered it, Brad. It’s really the reset of our price mechanics is what could be reflecting that, but it really is very similar. In fact, a copy of what we have done in Australia. Our specials penetrations are still running at similar levels in the 30% penetration to overall business and the funding between ourselves and suppliers is consistent with what was there before.

Adrian Lemme: That’s very helpful. Thank you.

Operator: Thank you. The next question comes from Lisa Deng from Goldman Sachs. Please go ahead.

Lisa Deng: Hi, Brad and Amanda, congratulations, first of all. And then I did want to ask a question on WooliesX. So, if we look at the gap, it seems like we actually grew profits by nearly $100 million, $96 million, I think during the period, and that is almost over 80% of the EBIT growth of Aussie foods. Can we understand a little bit why eCommerce has actually been so profitable or not profitable, but increased profitability, but that much, especially because same day. I remember previously, Amanda talked about that being quite costly and that increase is a material percentage. So, that’s the first question. And then the second question is the digital media and rewards. That also has come up a lot in terms of profitability. What’s contributing to that, and how do we think about that going forward as well? Thank you.

Brad Banducci: Thanks Lisa. I hope it sort of covered the high level in the matter – if there is anything on these specifics. Look, as I have said and Stephen talking about GP, you are quite right in the eCommerce. It’s just a reflection on the capabilities and investments the team has had and including advanced analytics. So, we are – we have just done our benchmarking globally. And there is always something to learn, I believe passionately from everyone, globally. But if you look at productivity, actually Woolworths and Coles for that matter at a general level are two of the most productive retailers globally when you look at unit volumes and how they manage them. But when you come to eCommerce specifically, we find we are very, very comfortably in the top quartile in terms of the overall productivity and the way we do it, and that’s a testament to the way we have worked and the analytics that underpin it and so on. So, as I have mentioned to an earlier question, our individually biggest process of cost improvement in the half was the whole way we pick eCommerce across our stores, in particular, in our CFCs, so amazing testament to the team, a lot of IP that goes into that. And actually, it’s just a lot of time when you with the team and you are watching our supermarket team as delivering new partnership with WooliesX what they are up to. Importantly, there, I do need to reference that having a DTB as we call it, or a side of the store where you can actually dispatch these items is incredibly important. So, there is a structural element and the CapEx we point in to have almost 750 stores with the DTB is important because if you think about eCommerce, it’s going from batch to flow. And even if you stage an item in a back of house, you actually have to put it away and then you have to take it out. Once you get to same day or delivery now, you move to a flow, you don’t stage. And that is actually it’s a huge improvement. When Amanda would have referenced what we did before, when you stage and do that, it’s really difficult. But once you flow and you do it into a DTB, the will changes. And the other point to make, which I made to Michael earlier is, we are building a bigger basket generally in eCommerce, and that’s through all the personalization tools that they are in the decision-making that helps the customer. But mostly some of our most important service a customer use there and come back is price compare where they can get the special, they can use best unit price. But we are seeing a much better basket and that mix in the basket is benefiting the general percentage. So, many other things at on in eCommerce, but we are building capabilities and the capabilities are coming through, if I look at our micro performance centers for a moment, which we have done together with takeoff, they would freely acknowledge that I think all of our micro performance centers are in their top 10 worldwide in terms of, again, productivity and the way that flow, and the way they work. It doesn’t mean we don’t want to do more with them, but that’s what’s going on there. On the rest, Lisa, really, there is again this continual drive for improvement. And so we don’t talk about it now, but we spent a huge amount of money back in F ‘23 and it was real CapEx money with even our re-platform of everyday awards, so there is huge investment for us. Now, $30 million, $35 million demand of direct CapEx in year plus all the other OpEx that went around it. We have re-platformed the whole business. We can now do real-time rewards. The way to validate this, by the way, is if you go into a store and you get a digital receipt and you pay by everyday awards, you will get the digital receipt before the process completed the transaction. Now, the process is too slow in one way. I think John has got it. He has heard it on this call, but true story. But it just shows how fast our platform is. It’s a world-class platform and we are using it to our leverage. We are then rebuilding up all the personalization tools in there in context of wiq. And we are starting to use that to be better at targeting boost to customers, to support the member prices in store, to suggest items you might have forgotten from your basket to build the basket and then support our services business that telco number is extraordinary. I don’t want to over-talk it, but from a cold start and a relatively for us, commoditized business is what we do, it’s actually have driven that there is a lot about personalization and targeting. So, many years of benefits you are seeing come through in that old portfolio. In Cartology, and I mentioned someone earlier and I have seen an article on the region that said this has to be proven in one publication. Cartology is 5 years old. It’s not a new business. We have put more money in investments into that business. We have run the headcount then more than anything else we have done inside Woolworths Group. We have gone on more Shopper Media Group. We have invested materially. We have rolled out screens in the last six months into our health and media house, which looked fabulous by the way, if you haven’t seen it full, run and look at that. You will see what we have done with the copy out. And then, of course, now we tend to go broader out into the mall with facility. And so we have seen that business deliver, we do want more out of it, but individually strongest growth in that business, Lisa, was in sponsored ads on our digital platform and to drive traffic with our digital platform. Of course, we want to get sales, but if we don’t want to get a personalized ads, and so that’s really starting to grow materially for us. So, you see all of that come through. The key thing for me, as I have talked to you, and we are all talking about the future, not the past and it’s probably we have achieved kind of moment. I am very actively involved for the next before I leave. But all of these are just starting, they are not finishing. This is just the start of the journey on all of the things I am talking to the material next generation series of opportunities we are about to deliver is exciting, energizing, stimulating in every possible way. So, it’s not a flash in the pan stuff.

Lisa Deng: Can I follow-up with Amanda, your appointment to CEO, obviously, of WooliesX is the key growth engine. Would you – will someone replace you with sort of Head of WooliesX or will you continue?

Brad Banducci: Lisa, I will take that question, if you don’t mind, Amanda, as you might imagine, was news this morning. So, we will work to that in a very considered process as well we will do with everything over the next six months. We have got plenty of time before the September start date. So, thank you for the question. We might just keep moving, if you don’t mind, just given – I am told not to follow-up, but to inflation. So, we will get on to the next question.

Operator: Thank you. The next question comes from Bryan Raymond from JPMorgan. Please go ahead.

Bryan Raymond: Hi. Good morning and again, congratulations to Brad and Amanda. And even Brad or…

Brad Banducci: That sounds very positive.

Bryan Raymond: But, no, I would certainly echo everyone else’s positive comments there. Just on – I am just interested at a high level on whether you feel like you have got the balance right in the business between – I don’t know gross margin let’s say it is an artificial separation. But just thinking about within the current climate politically and from a regulatory perspective, printing an almost 100 basis point uplift in gross margin, the optics of that, and I understand the drivers and you spelled those out quite well. But the optics of that and then the slowdown in comps to 1.4 in total sales to 1.5 as you said early in the calendar year. Do you think you have got the amount of reinvestment in the business right at the moment, or do you think that needs to evolve and become really a higher level of reinvestment in price and service and whatever else you need to do to reflect the current climate that we are in and to drive competition and to drive sales and ultimately earnings? Thanks.

Brad Banducci: Yes. Thanks Bryan. That’s exactly the right question. Look, our issue in that number will make headlines, and I am sure I will be held to account for at an inquiry next month. The truth is accounting what we say adjacency. So, you have just got to be very authentic in where it comes from. And we have got to be very forceful in balance in what we do. So, it wasn’t trying to grow margin at expense of our customers, hopefully, it is where our price indices are as good as they have ever been, quite honestly, at the moment, and we continue to invest in making sure that, that’s the case. So, we have got an optics challenge. I need to point out, by the way, it’s optics challenge in the context of the half. This half overall result is the same as the second half of last year. So, it needs to be seen in the context of the year, and we have got challenges as we have reflected that and talked about coming up, right. So, it just needs to be seen in that context of several respects that makes a lot of – is a long time ago. In terms of price competitiveness and how we go forward, of course, we need to adjust Bryan. We continue to do that every day. And Natalie and her team, in particular, are working very hard on this. I need to reference this and say these everyday needs carry [ph], which is where we are as a supermarket industry losing share to our competitors, which is, I would say, great for the consumers of Australia, but we can and need to do more there. We are certainly very focused on thinking through how we execute and do that because that is where it’s most pronounced, but we are all pretty clear right now, right. If we get cost benefits, we need to be very thoughtful with how we manifest that in consumer benefit. And can rest assured of our continued focus on that in the rest of the half.

Operator: Thank you. The next question comes from Craig Woolford from MST Marquee. Please go ahead.

Craig Woolford: Good morning Brad, and yes, congratulations on your time as CEO. It’s great to see the team you have got and the internal succession is really a reflection on your leadership, so congratulations there. I might shift tack on BIG W. Pre-COVID there was plans to close a number of stores. Things weren’t quite roger in COVID. What is the outlook for BIG W, when I look on a pre-AASB 16 basis, profitability would be incredibly skinny. Are you looking at store closures again for that brand?

Brad Banducci: Look, thank you, Craig. Every store when it comes up, when the lease store is coming up for expiry, we are very tough and very challenged on what we do. So, we make sure that that end. And we don’t have the number yet as the half year, but Steve can remind me, our lease liabilities continue to reduce [indiscernible]. So, we have been very thoughtful and very careful. And if we do renew leases, which are weighing invariably again for shorter renewal periods than we were, so the weighted average lease term is like closer to 60 weeks, way something for later. So, rest assured on that, Craig, so that’s the key. And actually, it’s key in general because, where we are under-trading, as Dan doesn’t mind me saying, is really eCommerce in BIG W and we have been lagging in terms of delivering a great eCommerce experience, in particular, for availability and apparel and things like entire based availability, which is important in a store, but paramount online. And so we have got work to do, and we need to move. We have done amazing job in our food business moving the same day, but we started to make really good progress in BIG W, but we are still way behind where we want to be. So, a combination of eCommerce plus the – in these categories means that we are cautious. That said, you will see some store openings from us. Those store openings are actually to bridge gaps in the network where we think we should have an offer, but also give us the eCommerce leverage we know the same day eCommerce including in a BIG W, we do need a store in the local geography. So, you will see a balanced story going forward. But we can follow-up, I think it’s fine pool on the lease term and things like that. So, rest assured on a very cautious underlying investment strategy in BIG W.

Operator: Thank you. The next question comes from Ben Gilbert from Jarden. Please go ahead.

Ben Gilbert: Hi. Good morning Brad and the team. Just on your market share performance because it’s that slide you put out with your rewards start of it, I think it’s a great slide. But – and not disrespectful, it feels like you have got these tools and you have got this phenomenal set of tools, you have got the best loyalty program in terms of your ability to flex and move around and all the repurposing stuff you have done. But I just still struggle to see how it’s yielding results from a share perspective because if you look at leakage, brands like Warehouse and whether it’s [indiscernible] or whatever it is, you have got better loyalty capabilities than them and you know your customer better and you can boost your extras. But do you think you are working it hard enough. And I suppose the question there is you look at what Sainsbury has done in the U.S. – sorry, in the UK, they are flying out, they are outgrowing ALD, they had push harder on price and price matching. Do you think you need to sacrifice a bit more margin in the near-term to drive volumes, because it just feels like the share trends aren’t doing what they should be, given the torque that you have got.

Brad Banducci: I think it’s the right challenge, Craig. Sorry, Ben one of us said Craig – it’s the right challenge, I think unequivocally, we are very aware and Sainsbury had a great Christmas through Nectar as hopefully you are all aware. I mean obviously, Clubcard works for Tesco, but Sainsbury actually just in a comp set actually had a very strong quarter. And we do take inspiration from what they are doing, plus what a number of other people are doing for growth. The launch program is growing in size, which is pretty cool, but do we need to use it a bit more forensically. And particularly into these non-food categories, we are so wide as the food business and we can’t lose that. That’s how we get the right balance in the program is a conversation you might imagine that we have in our core franchise is food, but we just it sounds a loss of share in non-food. And Ben just the way all of the mechanics work in the market, and you would know this well, when you look at jaws, they don’t take whole of market into account. So, it’s very hard to get a precise measurement, except to know that the these are categories that people need to have if the items not there and of course they are in our competitors either it is going somewhere else. So, rest assured of our commitment and focus to do a lot more in the space and to use everyday awards to do that. And to be inspired, particularly by Nectar, why we like Nectar is, it’s a multi-format loyalty program. It’s not just one launch program or one business like Clubcard, which is a bit more definitive and unequivocal that it’s just single focus on Tesco. So, we all look forward to coming back at the full year and talking about this.

Operator: Thank you. The next question comes from Richard Barwick from CLSA. Please go ahead.

Richard Barwick: Thank you, Brad. It’s been covered off quite a bit sort of this improvement in the – effectively the eCommerce margin and sort of how you have delivered on this result. But my question is to the sustainability of that or perhaps even ongoing improvement. You talked about the bigger basket size, the mix of basket, etcetera. Do you see that as the – as entrenched now? And do you see further scope for ultimately the margin delivered through eCommerce to improve?

Brad Banducci: The whole of – thanks Richard. The whole of retail, in general, is about continuing to build capabilities in HRAs going forward. So, nothing is entrenched. Everything requires work and effort to be done, whether it’s in the store or whether it’s in eCommerce. And of course, we need to continue to improve our store experience and build eCommerce on the top. And as we know, the connected customer shops the store in eCommerce, the store experience is important to outgrowing eCommerce as all the initiatives underway in eCommerce. I would say, we have been at this for a long time, right. This is not a new initiative we created WooliesX. I think it’s been – it’s 8 years ago, the year growing north of seven. So, it’s – we are being in a little time. I would say we have a good pipeline ways we want to enhance the experience for our customers in eCommerce and the best way to execute it. So, that’s fair, but we take nothing for granted. I would not underestimate within our stores, though all eCommerce, the importance of the app to provide a bit of shopping experiences as Natalie would point out, there is 460,000 customers now use the Woolworths app in in-store mode and helping them navigate find specials, find value in our stores for those customers. And that’s amazing, right. We have sort of doubled the number of people using in-store mode on the app, I think in the last six months. So, we just need to continue to drive benefits for customers, in particular through the app, convert web or mobile web customers, in particular to the app and then improve the personalization that sits there like, have you forgotten or reorder have become central to an app experience. That reorder needs to be smarter. It needs to be used in predictive AI, GenAI is the next step, just simple predictive AI and basket and composition of basket to make sure that we do that. It’s amazing our best unit price, which is where search wants the best unit price in the category. It’s got amazing resonance, it’s delivering unbelievable value for customers because they are getting to see unit-based price trade-off and that’s this inflation issue. So, we feel good, but nothing is taken for granted. Let me just put it that way. We need to continue to run. I will say, in the first seven weeks, our eCommerce performance, it has continued to build it hasn’t slipped back, so that’s really important.

Operator: Thank you. That does conclude our time for Q&A. I will hand the conference back to Brad for any closing remarks.

Brad Banducci: Thank you everyone for all of your questions and your kind wishes. And as I have alluded to, I certainly intend to be very active during the rest of my term before September. And I think it’s really important, honestly, and I know this sounds cliche, but it is important for me to restate it. I need to be judged what happens in the next 3 years and whether Woolworths delivers for its potential for you as our investors as much as what’s happened in the past. And that will require this amazing team that sits in the room to continue to deliver against our plans to get the right balance between our customers, our teams, our suppliers and of course, our shareholders. So, I am on the hook. Let me just put it that way. And look forward to talking to you all at Q3 and at the full year. Thank you very much.

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