Feb 26 (Reuters) - Woolworths Group WOW.AX reported a nearly 21% drop in its half-year underlying profit on Wednesday, as higher discounts to lure price-conscious customers squeezed margins and impacted earnings across its key divisions.

Australia's top grocery retailer said its underlying net profit after tax slipped to A$739 million ($468.82 million) for the six months ending January 5, down from A$929 million reported a year earlier.

($1 = 1.5763 Australian dollars)

(Reporting by Himanshi Akhand and Sneha Kumar in Bengaluru; Editing by Krishna Chandra Eluri)

((Himanshi.Akhand@thomsonreuters.com;Sneha.Kumar@thomsonreuters.com;))