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Woolworths stock plunges by AU$4.5Bn owing to supply chain disruptions

Woolworths stock plunges by AU$4.5Bn owing to supply chain disruptions

Woolworths, Australia's largest supermarket chain, was reportedly knocked out on the stock market after announcing a jump in the cost of concern.

Woolworths shareholders brutalized the supermarket chain on Tuesday after the firm dramatically cut its earnings estimates due to a AU$220 million increase in Covid expenses and reduced sales following the blockade.

After revealing to investors that Covid-19 had disrupted the supply chain, the firm's ASX-listed stock dropped to AU$4.5 billion in 30 minutes of trade, reaching its lowest point in over six months.

Woolworths' problems were heightened by a drop in retail sales in the second quarter. It is because, following the blockade, consumers resumed their normal purchasing patterns.

The retail chain’s online sales were almost entirely below the 3% rise in supermarket sales by approximately half, indicating that retail sales growth in the stores has severely slowed.

Woolworths CEO, Brad Banducci, stated that owing to the extensive impact of Covid Delta shares, the first half (of FY2022) was one of the most challenging halves that the supermarket chain faced in recent times.

Meanwhile, a series of severe weather events and a steady drop in tobacco sales were cited as factors behind the revised earnings forecast for the first half of the year.

According to Banducci, rains during summers and springs, restricted outside entertainment opportunities, echoing retailer's top Andres' remarks on the effects of bad weather.

Speaking of revenue, Woolworths' first-half sales ranged between A$1.19 billion and A$1.22 billion from July to December, as opposed to A$1.31 billion the previous year; as anticipated.

The fact that Woolworths supermarkets are very well stocked in the run-up to Christmas has softened the impact, albeit specialty items are swiftly disappearing from the racks.

Nevertheless, Big W's first-half sales will be lower than last year due to the four-month shutdown and store closures.

The figure is estimated to be in the range of A$20 million to A$30 million, a significant decrease from the A$133 million reported in the first half of FY2021.

According to the firm's first-half earnings, the employees received A$35 to A$40 million in Christmas bonuses.

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Sunil Jha

Sunil Jha has been a part of the content industry for close to two years. Having previously worked as a voice over artist and sportswriter, he now focuses on writing articles for, across a slew of topics, ranging from technology to trade and finance. With a business-oriented educational background, Sunil brings forth the expertise of deep-dive research and a strategic approach in his write ups.