Woolworths Group says it will declare a $NZ1.6 billion ($A1.5 billion) non-cash impairment on the value of its 191 New Zealand supermarkets following slowing sales there.
Woolworths says its New Zealand food business had a challenging first half, with earnings expected to be down 42 per cent to $NZ71 million ($A65.7 million), which prompted the review of the carrying value of the $NZ2.3 billion ($A2.1 billion) of goodwill on its balance sheets.
Woolworths Group spent $NZ13 million ($A12 million) during the first half rebranding 34 New Zealand Countdown supermarkets to Woolworths, a process that will continue as part of a multi-year transformation plan.
It has also begun a soft launch of its Woolworths Rewards loyalty program and launched its Milkrun same-day home delivery service in 32 stores.
"Our confidence in the potential of Woolworths New Zealand and our transformation plan remains unchanged," Woolworths Group chief executive Brad Banducci said.
"While the short-term performance has been impacted by a variety of factors and the speed of improvement remains uncertain, we are seeing early positive signs from our Kiwi customers as our transformation gathers momentum.”
Woolworths also said its Big W business had a challenging first half and was expected to deliver earnings materially below the prior year, but its Australian supermarkets' performance was solid.
Overall it expects first-half earnings before interest and tax of $1.68 billion to $1.70 billion, up 2.8 to 3.8 per cent from a year ago.
Woolworths Group will also declare a $209 million loss on the value of its 9.1 per cent interest in Endeavour Group, the alcohol retailer it spun off in 2021, after deciding to change the accounting treatment of those shares.
From now on it will recognise those assets based on the fair value of their share price, the company said.
Woolworths will release a fuller picture of its half-year financial performance on February 21.
