Woolworths reported FY26 sales growth of 4%, EBITDA growth of 7% and EBIT up 13%. The company’s sales momentum remains good and it should continue for the next six months, but then outperformance is likely to fade as Woolworths laps higher promotional activity. We expect a modest pick-up in inflation. Woolworths earnings growth was helped by unusually low depreciation growth. Nevertheless, Woolworths has more margin expansion opportunity over the next three years than Coles. The NZ and Big W segments had better earnings. The path to a 10%+ return on funds is plausible for these businesses but margins would still be low by historical and industry standards.