diff --git a/.github/workflows/ci.yml b/.github/workflows/ci.yml
index c40492d1cfb..ec001595f1d 100644
--- a/.github/workflows/ci.yml
+++ b/.github/workflows/ci.yml
@@ -213,7 +213,9 @@ jobs:
             if [ "$failedTests" -gt 0 ]; then
               if [ "$LAST_FAILED_RUN" == "1" ]; then
                 echo "Found failed tests, running only failed tests"
-                lastRunFlag="--last-failed"
+                # Add shard 1/1 to override the default shard value. No tests will run for shards > 1.
+                # The clean way would be to replace the shard flag from the command, but this also works.
+                lastRunFlag="--last-failed --shard=1/1"
               else
                 echo "Found failed tests, but LAST_FAILED_RUN is switched off. Running all tests."
               fi
diff --git a/plugins/woocommerce/changelog/ci-dont-use-sharding-for-last-failed b/plugins/woocommerce/changelog/ci-dont-use-sharding-for-last-failed
new file mode 100644
index 00000000000..53db001a0c0
--- /dev/null
+++ b/plugins/woocommerce/changelog/ci-dont-use-sharding-for-last-failed
@@ -0,0 +1,4 @@
+Significance: patch
+Type: dev
+
+CI: Use a single shard when re-running failed tests in CI
diff --git a/plugins/woocommerce/tests/e2e-pw/.gitignore b/plugins/woocommerce/tests/e2e-pw/.gitignore
index 4bd09d22e03..6706d67ff2d 100644
--- a/plugins/woocommerce/tests/e2e-pw/.gitignore
+++ b/plugins/woocommerce/tests/e2e-pw/.gitignore
@@ -1,3 +1,4 @@
 /.state
 /test-results
 /envs/_default
+/playwright-report
diff --git a/plugins/woocommerce/tests/e2e-pw/playwright.config.js b/plugins/woocommerce/tests/e2e-pw/playwright.config.js
index 6b7691be2c3..4fbcbbbe682 100644
--- a/plugins/woocommerce/tests/e2e-pw/playwright.config.js
+++ b/plugins/woocommerce/tests/e2e-pw/playwright.config.js
@@ -15,7 +15,6 @@ const {
 	CI,
 	DEFAULT_TIMEOUT_OVERRIDE,
 	E2E_MAX_FAILURES,
-	PLAYWRIGHT_HTML_REPORT,
 	REPEAT_EACH,
 } = process.env;
 
@@ -54,9 +53,7 @@ if ( process.env.CI ) {
 	reporter.push( [
 		'html',
 		{
-			outputFolder:
-				PLAYWRIGHT_HTML_REPORT ??
-				`${ testsResultsPath }/reports/playwright-report`,
+			outputFolder: `${ testsResultsPath }/playwright-report`,
 			open: 'on-failure',
 		},
 	] );