Woolworths Q3 2025: A Battle of Progress and Pitfalls – Is This Stock a Buy?

Let’s cut to the chase: Woolworths Group’s Q3 2025 trading statement is a tale of two stories. On one hand, sales are ticking up, e-commerce is booming, and cost-cutting is on track. On the other, weather disasters, grocery deflation, and BIG W’s lingering woes are clouding the horizon. Let’s dissect the numbers and figure out what this means for investors.

Sales: Growth, But With Caveats
Woolworths’ Australian food sales rose 3.6% to £13 billion, driven by promotions and trade events. E-commerce surged 16.3%, though that’s below expectations—blame the floods in Queensland and NSW that shut down stores and crimped delivery. Meanwhile, New Zealand sales jumped 4.8%, fueled by the Minecraft Kiwi collectibles campaign (which, let’s be honest, was a huge merch hit). Even better? New Zealand’s e-commerce penetration hit 14.8%, a sign customers are embracing digital shopping.

But here’s the catch: the Minecraft campaign contributed less than 2.5% to sales growth. That’s a reality check after earlier hype. The real wins? Promotions (deep discounts drove transaction growth) and the Everyday Rewards program, which added 600,000 new members.

Financials: A Solid Foundation, But Don’t Get Complacent
EBITDA hit $216.5 million, and revenue over the past 12 months was $630.9 million. Gross profit margins held steady at 60.5%, and that $400 million cost-cutting program? It’s on track, simplifying operations without gutting staff morale.

Yet, the $70 million EBIT loss at BIG W is a glaring red flag. Clothing markdowns and weak autumn sales? Unacceptable. Management is rolling out RFID tech and own-brand products to fix this—let’s see if they can turn it around.

The Storms and the Grocery Blues
Mother Nature isn’t playing nice: Queensland floods cost Woolworths $20–25 million in stock losses, transportation delays, and store damage. And then there’s the grocery deflation: prices fell 0.5% for the fifth straight quarter in long-life categories (pantry staples, snacks). That’s a double-edged sword—good for customers, bad for margins. Meanwhile, fresh foods (produce, meat) are seeing inflation, which could cut into sales if prices get too high.

The Rivalry Heats Up
Coles isn’t napping. Their Click & Collect (CFC) services in NSW and Victoria are nipping at Woolworths’ heels. To stay ahead, Woolworths is pushing same-day fulfillment: 31% of e-orders now arrive in 2 hours, and 55% the same day. That’s a battle worth winning.

The Verdict: Hold for Now, but Watch Closely
Here’s why you might hold:
- E-commerce growth (especially in NZ) is a bright spot.
- Cost savings are real—$400 million on track.
- Customer NPS stabilized at 44%, a sign loyalty isn’t crumbling.

Here’s why you might wait:
- BIG W’s losses ($70 million) and clothing struggles are a drag.
- Grocery deflation could linger, squeezing margins.
- The stock’s beta of 1.37 means it’s volatile—watch for dips.

Final Call: Buy the Dip, but Beware the Storm
If Woolworths’ shares tumble after next week’s May 12 earnings announcement, it could be a buying opportunity—provided management addresses BIG W’s issues and shows a plan to combat deflation. The cost-cutting and e-commerce momentum are solid foundations, but this stock isn’t a slam dunk yet. For now, sit tight and wait for clearer skies.

Investors: This is a company to watch, but don’t let the Minecraft magic blind you to the rainy-day realities. The path to profit is there—it’s just a bit slippery.