Woolworths announces strong profit increase
Australia’s largest retailer, Woolworths Limited, last week announced its first half year sales from continuing operations increased to $30.7 billion, an increase of $1.4 billion or 4.8% on the same period in the previous year.
CEO Grant O’Brien said, “This solid first half result is a reflection of the sharpened focus on our core businesses and better meeting our customers’ needs. The growth our businesses are achieving while pursuing a transformational path for Woolworths is pleasing. However, there is still a great deal more to do.”
“We remain focused on executing our strategic priorities and continuing the momentum generated in the first half of the financial year,” said O’Brien.
Food and Liquor
Australian Food and Liquor sales increased 4.7% ($0.9 billion), accompanied by strong growth in customer numbers as well as increased market share. The retailer revealed they served on average 20.2 million customers per week, an increase of 4.6% when compared to the same period in the prior year. Woolworth’s attributed this to its effective promotional activities, leveraging growing customer data capabilities, and the return of price inflation in Produce.
BIG W sales rose 3.6% on the previous year, with 4 new stores opening during the half year, bringing the total to 176. Julie Coates, Director of BIG W said these results were due to “a successful Christmas campaign combined with a strong first quarter, delivering strong top line sales growth and positive comparable sales growth for the first half.”
Hotels reported sales growth of 19.3% for the half year driven by the acquisition of 29 hotels in NSW, two in QLD and one in WA and the changes to Victorian gaming regulations which came into effect in August 2012.
Home Improvement business continues to grow, increasing 54.6% for the half year, with 25 Masters stores now trading in all mainland Australian states and the ACT. The launch of the ‘I made it with Masters’ marketing campaign has received a positive reception in all markets.
Businesses sold off
In line with Woolworth’s broader strategic priorities, Consumer Electronics and Dick Smith Electronics were sold off during the second quarter. The Indian business was sold to Infiniti Retail Limited in October 2012 and Dick Smith Electronics Australia and New Zealand was sold to Anchorage Capital Partners in November 2012.
Woolworths also stated that online sales from their continuing operations increased 40% for the half year, indicating the ongoing success of their multi-option strategies across all their businesses.
Australian Food News comments
The half-year results from Woolworths showing its 4.8 per cent growth come after its competitor Coles reported growth of 5.2 per cent compared to the same period last year. Similar to Woolworths, Coles reported an increase in liquor sales, and growth in its home improvement and department store businesses.
Australian Food News has noted previously that the two Australian supermarket giants appear to have different strategies, with Woolworths relying on store numbers to increase its profits in contrast to the Coles strategy of a focus on growth of sales within individual stores.