Shares of Woolworths Group (ASX: WOW) surged 3.4% on Wednesday, closing at A$40.18 after touching an intraday high of A$41.19. The rally, which added approximately A$1.62 billion to the company's market value, was fueled by the conclusion of its popular Disney Ooshies collectible campaign, which contributed between 1.5 and 2.0 percentage points to early fiscal 2027 sales growth in Australian Food.
The promotion, which ended on August 25, accounted for 19.7% to 26.3% of the 7.6% increase in early FY2027 Australian Food sales. The campaign, which offered one collectible per A$30 purchase and featured 40 different characters, also extended to BIG W and MILKRUN. Woolworths noted that 97% of the collectibles were made from recycled materials, aligning with its sustainability goals.
Woolworths' full-year results for fiscal 2026 (ended June 2026) showed robust performance. Group sales rose 3.6% to A$71.539 billion, while earnings before interest and tax (EBIT) before significant items increased 12.7% to A$3.105 billion. Underlying net profit after tax (NPAT) grew 15.4% to A$1.599 billion. Australian Food sales climbed 4.6% to A$53.852 billion, with EBIT up 8.5% to A$2.953 billion. The operating margin expanded to 5.5% from 5.3%, despite ongoing price investments and higher wage costs.
The company also delivered a strong dividend, raising the full-year payout by 15.5% to A$0.97 per share. E-commerce remained a key growth driver, with group online revenue jumping 15.9% to A$10.596 billion, more than four times the pace of overall sales growth.
Investors were particularly encouraged by the market's reaction to the earnings rebound. The single-day share price gain was approximately 4.6 times larger than the A$351 million increase in annual EBIT, underscoring the market's optimism about Woolworths' turnaround and current trading performance.
Woolworths' chief marketing officer, Sean Barrett, said the Ooshies initiative was designed to make the weekly grocery trip “even more rewarding.” The campaign also included a collectible case priced at A$10, which may have contributed to consumer engagement.
Pricing remains a focal point for investors. Woolworths has expanded its Lower Shelf Price program to cover 1,035 items, with an average price reduction of 16.4%. This aggressive pricing strategy is aimed at retaining customers and competing effectively in a challenging retail environment.
Balance sheet indicators also improved. Operating cash flow before interest and tax reached A$6.5 billion, with cash realization at 107%. The net debt-to-EBITDA ratio declined to 2.5 times, providing financial flexibility for future investments or shareholder returns.
In comparison, rival Coles Group (ASX: COL) saw its shares rise 1.18% to A$24.03. Coles reported a 3.7% increase in supermarket sales for the first eight weeks, lagging Woolworths' 7.6% growth, which highlights Woolworths' competitive edge during the promotional period.
Despite the strong rally, analysts remain cautious. The consensus rating on Woolworths is Neutral, with three Buy, seven Hold, and five Sell recommendations. The average price target of A$37.04 is 7.8% below Wednesday's closing price, suggesting limited upside potential in the near term.
Risks are evident: the Ooshies campaign has ended, so the associated sales boost may fade quickly. Ongoing investments in shelf prices or rising wage demands could also constrain future margin improvements. Investors are now looking for evidence that food sales growth can continue to outpace competitors without the support of collectible promotions. The valuation jump on Wednesday may limit the downside if the post-campaign slowdown is sharper than expected.
