Agreement Reached to Resolve Woolworths Strike

By Adwitiya Srivastava

(Reuters) – Australia's top grocer Woolworths announced on Monday that it has reached an agreement with industrial union workers to increase wages, resolving the strike action that had been impacting service levels at Woolworths supermarkets across Australia.

Last month, hundreds of workers went on an indefinite strike in response to issues regarding wages and working conditions at the supermarket giant's distribution centers, but the company had struggled to reach an agreement over wage hikes.

On Monday, Woolworths stated that its individual enterprise agreement, endorsed by the United Workers Union on Dec. 7, guarantees team members a wage increase of approximately 11% over three years and addresses concerns related to performance metrics.

As a result, shares of the company rose nearly 2% to A$30.090 by 1230 GMT, marking the largest intraday gain since Nov. 19.

Woolworths has estimated a one-off loss between A$50 million ($31.98 million) to A$60 million in its Australian food segment due to lost sales and increased stock losses, with a negative sales impact of A$140 million since the onset of the industrial action.

The company anticipates its Australian Food division will continue facing sales and profit impacts in the second quarter, as it works to restore stock levels ahead of the busy Christmas trading period.

Phillip Kimber, executive director for consumer research at E&P Financial Group, noted that it is positive Woolworths has resolved the industrial dispute with an average wage increase aligned with their expected growth levels, around 4% per annum. He added, "In our view, the sales and EBIT impacts are clearly one-off in nature; therefore, we will maintain our underlying forecasts until further clarity is provided in February."

Woolworths has resumed operations at four distribution centers (DCs) in Victoria and New South Wales (NSW) after the period of industrial action.

> ($1 = 1.5637 Australian dollars)