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  • Woolworth’s (WOW) shares have slumped after the company released a trading update for the first half of FY22
  • The ASX-20 lister says the Delta strain of COVID-19 negatively affected its Australian food business, impacting stock flow and operating times
  • As a result of the multiple outbreaks on Australia’s east coast during the last six months, earnings before interest and taxes (EBIT) is expected to total $1.9 billion to $1.22 billion
  • The retail giant also plans to spend up to $40 million on Christmas gifts to staff, while direct COVID-19 related costs will exceed $150 million
  • Woolworths dropped over 9 per cent this morning, and is now trading down 7.72 per cent at $37.43 each

Woolworths’ (WOW) shares have slumped after the company released a trading update for the first half of the 2022 financial year.

The ASX-20 lister said the Delta strain of COVID-19 has negatively affected its Australian food business, impacting both stock flow and operating times.

As a result of the multiple outbreaks on Australia’s east coast during the last six months, WOW’s earnings before interest and taxes (EBIT) is expected to total $1.9 billion to $1.22 billion for 1H FY22.

“The first half of F22 has been one of the most challenging halves we have experienced in recent memory due to the far-reaching impacts of the COVID Delta strain and its impact on our end-to-end stock flow and operating rhythm,” CEO Brad Banducci said.

“COVID has had a significant impact on costs, even more so than last year due to the combination of both direct COVID-related costs, together with the indirect impacts from disruption caused by COVID.

“This includes the significant disruptions we have seen across the end-to-end supply chain, and the material inefficiency this causes in our stores, distribution centres and transportation.”

The retail giant estimates the direct cost of COVID-19 will exceed $150 million, while up to $40 million will be spent rewarding staff for their help during the pandemic.

Despite the COVID-19 impact, Woolworths said total sales in Q2 have increased by 2 per cent compared to the same period in the prior year.

The supermarkets owner has also recorded some positive sales momentum going into Christmas and is expecting a stronger performance in the second half of FY22.

Shares in Woolworths dropped over 9 per cent during morning trade, following today’s market release.

WOW was still down 7.72 per cent at $37.43 each at 1:24 pm AEDT.

WOW by the numbers
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