Stimulus benefits will fade, says Woolworths
Woolworths chief executive Michael Luscombe warns that the last two years of growth, buoyed by the Federal Government’s economic stimulus package, cannot be sustained.
“Over the last eight months we knew that we would be up against challenging times,” Luscombe said yesterday. “We now have to work our way through to October-November before it washes through the economy.”
According to Luscombe, while the economy never reached the lows predicted at the height of the global financial crisis, rising interest rates and petrol prices were hurting consumer confidence.
Addressing a boardroom event for senior business executives through the Australia-Israel Chamber of Commerce, Luscombe said that the stimulus package saved and protected retail jobs, and that the benefits were only realised a year later.
Woolworths’ third-quarter sales results showed a 3.8% rise in sales, excluding petrol, but Luscombe wasn’t positive about the future, revenue-wise.
“This year, when you look at the numbers against last year they are not looking so great,” he said.
Luscombe said that Woolworths was paying closer attention to cost savings, as well as passing some of the savings on to shareholders and customers, including a 50% saving in printing costs and 30% less paper used just by reducing the font size on publications.
“If you find 1000 of these little things, you could save the company $1 billion over the years.”
Some people might say that Woolworths would have been better off without the stimulus, but Luscombe doesn’t believe so.
“I’d rather have it in my pocket than watch it out there and try and get it,” he said.