Woolworths' first-half profit has been cut in half after a court ruling left the company owing around $710 million to workers in back pay.
The supermarket giant on Wednesday posted a net profit of $374 million for the 27 weeks to January 4, down 49.4 per cent from a year ago. However, sales were up 3.4 per cent to $37.1 billion.
Woolworths said that after the Federal Court ruling in September about award entitlements, it had set aside $710 million for employee remediation.
Excluding the provision, Woolworths' net profit was up 16.4 per cent to $859 million. Earnings before interest, tax, depreciation and amortisation climbed 8.5 per cent to $3.2 billion.
Chief executive Amanda Bardwell said Woolworths was making progress on its strategy and had invested in value, on-demand convenience and in-store execution.
"All customer metrics have improved, trading momentum is stronger and we are seeing market share stabilise," she said on Wednesday.
Sales at Woolworths' supermarkets were up 3.6 per cent, while Big W sales rose 1.8 per cent.
Woolworths said that through a partnership with Google, it planned to transform its AI chatbot Olive into a "market-leading conversation shopping companion" sometime in the second half.
The court ruling in September covered 27,000 Coles and Woolworths in-store managers who received annual salaries with "set-off clauses" to meet award entitlements, like overtime and penalty rates.
The court said that such clauses were only valid within a single pay cycle and that higher pay in one pay period could not be used to offset a shortfall in another, a ruling which had major implications for Australian employers.
Woolworths set aside $406 million in potential remediation for team leaders, plus another $304 million for interest, superannuation and payroll taxes.
Woolworths will pay an interim dividend of 45 cents per share, up 15.4 per cent from a year ago.
In early trading on Wednesday, Woolworths shares were up 7.9 per cent to $34.02.
