Woolworths Faces Profit Dip Amid Bargain Hunt and Legal Scrutiny

Woolworths, the leading Australian grocer, anticipates a decline in first-half profit due to consumer search for bargains and legal scrutiny over alleged fake discounts. Rising costs and intensified discounting have pressured margins. The ACCC lawsuit and market conditions further challenge the supermarket giant.

Woolworths, Australia's prominent grocery chain, has issued a profit warning for its main food division as increasing consumer bargain hunting and heightened legal scrutiny affect its operations. The company's shares plummeted following the announcement.

The Australian Competition and Consumer Commission (ACCC) has filed a lawsuit against Woolworths for allegedly misrepresenting discounts. The grocer's first-quarter sales increased, yet profit margins suffered due to aggressive discounting. The cost-of-living crisis has compounded challenges for both Woolworths and rival Coles, leading lawmakers to call for potential structural changes in the sector.

Woolworths projects its half-year earnings to drop significantly, with ongoing scrutiny impacting its brand perception. Meanwhile, Australia's central bank maintains interest rates at historic highs, constraining consumer spending amidst rising housing costs and inflation.

(With inputs from agencies.)