Supermarket giant Woolworths has increased its full-year profit to $1.6 billion and hiked its dividend, but its discount department store Big W is taking a hit as consumers dial back non-essential spending.

The $44 billion retailer said on Wednesday morning that its sales in the year to June 25 jumped by 5.7 per cent to $64.3 billion, while its net profit from continuing operations rose 4.6 per cent to $1.6 billion. The profit came in slightly below market expectations, but investors cheered the company’s growing supermarket profit margins, with the stock up 4.4 per cent to $37.82 by mid-morning.

Like its ASX-listed rival Coles, Woolworths called out increasing levels of stock loss amid a rise in shoplifting in the face of Australia’s cost-of-living crisis.

Chief executive Brad Banducci said theft had spiked in the third quarter, and was “one of the components [of] stock loss, but not the biggest component”. Aggression towards staff members was a bigger concern, he noted, with the company recording more than 3000 acts of violence, threats and abuse over the past year.

Despite supplier cost inflation, the company improved profit margins at its Australian supermarkets, with earnings before interest and tax as a percentage of sales now at 6 per cent, up from 5.3 per cent last year. Banducci attributed the higher profitability to cost cuts during the pandemic, combined with upgrades to the company’s supply chain and analytics platform, which personalises customer offers and helps plan more effective promotions.

“That all comes together in the result we’ve seen, it needs to be seen in that context,” he said on a call with media on Wednesday morning.

He said the company was continuing to look at ways to support customers under pressure in the cost-of-living crisis with well-priced product offers.

He also echoed Coles boss Leah Weckert in confirming that the inflation on food prices has started to moderate, with meat, fruit and vegetable prices dropping, though prices for packaged goods remain elevated.