Australia’s Woolworths hikes worker wages to resolve strike action, shares gain

By Adwitiya Srivastava

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

Hundreds of workers joined forces last month to go on an indefinite strike in retaliation against wages and working conditions at the supermarket giant’s distribution centers, but the company failed to reach an agreement with the union over wage hikes.

Woolworths said on Monday that its individual enterprise agreement offers, endorsed by the United Workers Union on Dec. 7, guarantee team members a wage increase of about 11% over three years and address concerns over performance metrics.

Shares of the company advanced nearly 2% to A$30.090 by 1230 GMT, to record their biggest intraday gain since Nov. 19.

The company estimates a one-off loss of A$50 million ($31.98 million) to A$60 million in its Australian food segment due to lost sales and higher stock losses, with a negative sales impact of A$140 million since the start of the industrial action.

Woolworths expects its Australian Food division to face further sales and profit impacts in the second quarter, as it works to restore stock levels at distribution centers and stores ahead of the busy Christmas trading period.

It’s positive that Woolworths has resolved the industrial dispute with an average wage increase within their expected growth levels, i.e. ~4% per annum, said Phillip Kimber, executive director for consumer, research at E&P Financial Group.

“In our view, the sales and EBIT impacts are clearly one-off in nature, as a result, we will leave our underlying forecasts unchanged until further clarity is provided in February,” Kimber said.

The company has now resumed its operations at four distribution centers (DCs) in Victoria and New South Wales (NSW) following a period of industrial action.

($1 = 1.5637 Australian dollars)